SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994. Commission File No. 0-6080
F O O D L I O N, INC.
(Exact name of registrant as specified in its charter)
Incorporated in North Carolina 56-0660192
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 1330, 2110 Executive Drive
Salisbury, North Carolina 28145-1330
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code--
(704) 633-8250
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $.50 per share
Class B Common Stock, par value $.50 per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter)
is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.[x]
The aggregate market value of the voting stock held by non-
affiliates of the Registrant based on the price of such stock at
the close of business on March 23, 1995 was $688,387,075.
For purposes of this report and as used herein, the term "non-
affiliate" includes all shareholders of the Registrant other than
Directors, executive officers, and other senior management of the
Registrant and persons holding more than five per cent of the
outstanding voting stock of the Registrant.
Outstanding shares of common stock of the Registrant as of
March 23, 1995.
Class A Common Stock - 244,141,726
Class B Common Stock - 239,571,114
Exhibit index is located on sequential page 17 hereof.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
in this Form
10-K:
1. Annual Report to Shareholders for the year ended December 31, 1994
are incorporated by reference in Part II hereof.
2. Proxy Statement for the 1995 Annual Meeting of Shareholders of the
Company to be held on May 4, 1995, are incorporated by reference in
Part III hereof.
PART I
Item 1. Business.
Food Lion, Inc. (the "Company") engages in one line of
business, the operation of retail food supermarkets principally in
the southeastern United States. The Company was incorporated in
North Carolina in 1957 and maintains its corporate headquarters in
Salisbury, North Carolina.
The Company's stores, which are operated under the name of
"Food Lion", sell a wide variety of groceries, produce, meats,
dairy products, seafood, frozen food, deli/bakery and non-food
items such as tobacco, health and beauty aids and other household
and personal products. The Company offers nationally and
regionally advertised brand name merchandise as well as products
manufactured and packaged for the Company under the private label
of "Food Lion". The Company offers over 20,000 Stock Keeping
Units (SKU's) in its prototype 35,000 square foot model.
The products sold by the Company are purchased through a
centralized buying department at the Company's headquarters. The
centralization of the buying function allows the management of the
Company to establish long-term relationships with many vendors
providing various alternatives for sources of product supply.
Food Lion currently operates deli-bakery departments in
approximately 55% of its stores. Deli-bakeries are included in
approximately 90% of new store openings. Deli-bakeries are added
to existing stores after research indicates a customer demand for
such products.
-2-
The business in which the Company is engaged is highly
competitive and characterized by low profit margins. The Company
competes with national, regional and local supermarket chains,
discount food stores, single unit stores, convenience stores and
warehouse clubs. The Company will continue to develop and
evaluate new retailing strategies that will challenge competitors.
Seasonal changes have no material effect on the operation of the
Company's supermarkets.
Since 1968, the Company has followed a policy of selling
merchandise at low item prices in order to increase volume without
a proportionate increase in fixed and operating expenses. Trading
stamps are not offered in any of the Company's supermarkets.
As of December 31, 1994, 1,039 supermarkets were in
operation, of which 364 were located in North Carolina, 97 in
South Carolina, 222 in Virginia, 70 in Tennessee, 52 in Georgia,
106 in Florida, 24 in Maryland, 7 in Delaware, 15 in West
Virginia, 13 in Kentucky, 7 in Pennsylvania, 49 in Texas, 8 in
Oklahoma and 5 in Louisiana. As of March 23, 1995, the Company
had opened three supermarkets since December 31, 1994, closed one
supermarket and had signed leases for ten supermarkets which are
expected to open in either 1995 or 1996.
Warehousing and distribution facilities, including a truck
fleet, are owned and operated by the Company and are located in
Salisbury and Dunn, North Carolina; Petersburg, Virginia; Elloree,
South Carolina; Green Cove Springs and Plant City, Florida;
Clinton, Tennessee; Greencastle, Pennsylvania and Roanoke, Texas.
As of December 31, 1994, the Company employed 29,352 full-
time and 35,488 part-time employees.
The following table shows the number of stores opened and closed
and the number of stores opened at the end of the year for the
past three years.
# Stores # Stores # Stores Opened
Opened Closed Year-end
1994 30 87 1,039
1993 100 16 1,096
1992 140 9 1,012
Item 2. Properties.
Supermarkets operated by the Company in the southeastern
United States average 26,500 square feet in size. The Company's
current prototype retail format is a 35,000 square foot model with
a deli-bakery department. All of the Company's supermarkets are
self-service, cash and carry stores which have off-street parking
facilities. With the exception of 101 supermarkets which it owns,
the Company occupies its various supermarket premises under lease
agreements providing for initial terms of up to 25 years, with
options generally ranging from ten to twenty years. All
supermarkets are located in modern, air-conditioned facilities.
-3-
The table below sets forth information with respect to the
expiration of leases on supermarkets and surrounding land in
operation by the Company on December 31, 1994.
Year of Number of Leases Year of Number of Leases
Expiration* which expire Expiration* which expire
1995 1 2022 9
1997 1 2023 22
1998 1 2024 16
1999 2 2025 28
2001 2 2026 60
2004 3 2027 92
2005 1 2028 98
2006 2 2029 109
2007 4 2030 128
2008 4 2031 72
2009 3 2032 72
2010 2 2033 66
2012 3 2034 37
2013 4 2035 6
2014 3 2036 6
2015 1 2037 21
2016 3 2038 24
2017 6 2039 3
2018 5 2043 2
2019 5 2045 1
2020 5 2047 1
2021 7 2051 1
*NOTE: Year of expiration includes renewal terms.
The following table identifies the location and square footage of
distribution centers and office space owned by the Company as of
December 31, 1994.
Location of
Property Square Footage
Distribution Center #1 Salisbury, NC 1,630,233
Distribution Center #2 Petersburg, VA 1,124,718
Distribution Center #3 Elloree, SC 1,093,252
Distribution Center #4 Dunn, NC 1,224,652
Distribution Center #5 Green Cove Springs, FL 832,109
Distribution Center #6 Clinton, TN 825,967
Distribution Center #7 Greencastle, PA 1,236,124
Distribution Center #8 Plant City, FL 758,549
Distribution Center #9 Roanoke, TX 1,254,169
Corporate Headquarters Salisbury, NC 262,672
10,242,445
-4-
Item 3. Legal Proceedings.
Longman et al. v, Food Lion, Inc. and Tom E. Smith, 4:92 CV 696
(M.D.N.C.) (complaint filed November 12, 1992, and amended January
23, 1993) ("Longman"); and Feinman et al. v. Food Lion, Inc. and
Tom E. Smith, 4:92 CV 705 (M.D.N.C.) (complaint filed November 13,
1992) ("Feinman").
The Longman and Feinman actions assert claims under Section 10(b)
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and Rule 10b-5 for "securities fraud" and claims of common
law fraud and negligent misrepresentation, and purport to be class
actions on behalf of purchasers of Food Lion stock during certain
"class periods." These actions seek damages for such purported
class members in presently unknown amounts, Plaintiffs' attorneys'
fees and costs, punitive damages, prejudgment interest and certain
other relief. In the Longman and Feinman actions, Tom E. Smith is
also a defendant. The Longman and Feinman actions have been
consolidated for discovery and trial purposes. On October 17,
1994, the district court entered an order granting class
certification motions in these actions and certifying a single
class composed of those persons who purchased common stock of the
Company from May 7, 1990 through November 5, 1992 and were damaged
thereby. Merits discovery has begun in both of the actions.
Based on currently available information, the Company believes
that any resulting liability will not have a material adverse
effect on the financial condition or results of operations of the
Company.
In re Food Lion, Inc., Fair Labor Standards Act "Effective
Scheduling" Litigation, MDL Docket No. 929, pursuant to which a
number of actions against the Company were transferred by the
Multi-District Litigation Panel to the United States District
Court for the Eastern District of North Carolina for consolidated
pre-trial proceedings (the "Multi-District Action"). Those
pretrial proceedings are complete, and a number of the original
actions were dismissed. Appeals to the United States Court of
Appeals for the Fourth Circuit by the approximately 120 claimants
dismissed from the North Carolina actions are now pending. The
time for appeal has not yet run with respect to the other
dismissed claims. The cases that were not dismissed have been
remanded to their transferor districts for trial. The remaining
cases involve the claims of approximately 357 plaintiffs in
Florida, North Carolina and South Carolina who seek payment under
the Fair Labor Standards Act for alleged uncompensated overtime
hours, liquidated damages, additional contributions to the
Company's profit sharing plan, costs and attorneys' fees. The
Company will vigorously defend each of the Actions that remain
pending. The parties are currently discussing the potential for
employing alternate dispute resolution procedures to resolve the
remaining North Carolina and South Carolina claims. Based on
currently available information, the Company believes that any
resulting liability will not have a material adverse effect on the
financial condition or results of operations of the Company.
Sutton, et al. v. Food Lion, Inc., Civil Action No. 3:94CV322
(E.D. Va.). On May 19, 1994, thirteen plaintiffs filed a lawsuit
against Food Lion in the United States District Court for the
Eastern District of Virginia, alleging employment discrimination
in violation of Title VII of the Civil Rights Act of 1964, as
amended, and 42 U.S.C. 1981, as amended. The complaint alleged a
pattern and practice of discrimination in hiring, promotions,
discipline, discharge, allocation
-5-
of hours, awarding full-time status, and wages. The complaint
sought certification of a class defined as all past and present
black employees of Food Lion and all black applicants for
employment at Food Lion. The complaint also sought broad
injunctive relief, monetary damages including compensatory and
punitive damages, attorneys' fees and expenses.
Food Lion opposed plaintiffs' efforts to have the case certified
as a class action. On September 7, 1994, the Court denied
plaintiffs' motion for class certification and set the thirteen
individual claims for trial. After the Court's denial of class
certification, several of the individual plaintiffs' claims were
dismissed by the Court either as the result of motions filed by
Food Lion or through the acceptance of offers of judgment or
voluntary settlement offers. After a two-day bench trial, the
Court, in a January 20, 1995 order, dismissed the claims of the
two remaining plaintiffs and entered final judgment in favor of
Food Lion. One of the two plaintiffs appealed the District
Court's order to the United States court of Appeals for the
Fourth Circuit, and that appeal is pending. Based on currently
available information, the Company believes that any resulting
liability will not have a material adverse effect on the financial
condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information pertaining to the Class A and Class B Common
Stock price range, dividends and record holders discussed beneath
the headings "Market Price of Common Stock" and "Dividends
Declared Per Share of Common Stock" in the Annual Report to
Shareholders for the year ended December 31, 1994, is hereby
incorporated by reference.
Item 6. Selected Financial Data.
The information set forth beneath the heading "Five Year
Summary of Operations" in the Annual Report to Shareholders for
the year ended December 31, 1994, is hereby incorporated by
reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information set forth beneath the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report to Shareholders for the year
ended December 31, 1994, is hereby incorporated by reference.
-6-
Item 8. Financial Statements and Supplementary Data.
The financial statements, including the accompanying notes
and results by quarter, set forth beneath the headings "Statements
of Income", "Balance Sheets", "Statements of Cash Flows",
"Statements of Shareholders' Equity", "Notes to Financial
Statements" and "Results by Quarter" in the Annual Report to
Shareholders for the year ended December 31, 1994, are hereby
incorporated by reference.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information pertaining to nominees for election as
directors and the Company's executive officers set forth beneath
the heading "Election of Directors" and in the description of
employment agreements beneath the heading "Employment Plans and
Agreements" in the Proxy Statement for the 1995 Annual Meeting of
Shareholders to be held May 4, 1995, is hereby incorporated by
reference.
Item 11. Executive Compensation.
The information pertaining to executive compensation set
forth beneath the heading "Report of the Senior Management
Compensation Committee, Stock Option Committee and Board of
Directors" in the Proxy Statement for the 1995 Annual Meeting of
Shareholders to be held on May 4, 1995, is hereby incorporated by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information pertaining to security ownership of certain
beneficial owners and management set forth beneath the heading
"Security Ownership of Certain Beneficial Owners and Management"
in the Proxy Statement for the 1995 Annual Meeting of Shareholders
to be held on May 4, 1995, is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
The information relating to certain relationships and related
transactions set forth beneath the headings "Employment Plans and
Agreements - Low Interest Loan Plan" and "Compensation Committee
Interlocks and Insider Participation" in the Proxy Statement for
the 1995 Annual Meeting of Shareholders to be held May 4, 1995, is
hereby incorporated by reference.
-7-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements:
The following financial statements are incorporated by
reference in Item 8 hereof from the Annual Report to
Shareholders for the year ended December 31, 1994:
ANNUAL REPORT
PAGE NO.
Statements of Income for the years
ended December 31, 1994, January 1,
1994 and January 2, 1993 11
Balance Sheets, as of December 31,
1994 and January 1, 1994 12
Statements of Cash Flows for the
years ended December 31, 1994,
January 1, 1994 and January 2, 1993 13
Statements of Shareholders' Equity
for the years ended December 31, 1994,
January 1, 1994 and January 2, 1993 14
Notes to Financial Statements 15-19
Results by Quarter (unaudited) 20
10-K
PAGE NO.
2. Financial Statement Schedules:
Report of Independent Accountants 15
II. Valuation and Qualifying Accounts 16
-8-
All other schedules are omitted since the required
information is not present or is not present in amounts sufficient
to require submission of the schedule, or because the information
required is included in the financial statements and notes
thereto.
With the exception of the financial statements listed in the
above index, the information referred to in Items 5, 6, 7 and the
supplementary quarterly financial information referred to in Item
8, all of which is included in the 1994 Annual Report to
Shareholders of Food Lion, Inc. and incorporated by reference
into this Form 10-K Annual Report, the 1994 Annual Report to
Shareholders is not to be deemed "filed" as part of this report.
3. Exhibits:
Exhibit No.
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)
(incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K dated March
24, 1992)
3(b) Bylaws of the Company effective July 1, 1990
(incorporated by reference to Exhibit 3(c) of
the Company's Annual Report on Form 10-K dated
March 25, 1991)
4(a) Indenture dated as of August 15, 1991 between
the Company and the Bank of New York, Trustee,
providing for the issuance of an unlimited amount
of Debt Securities in one or more series (incorpo-
rated by reference to Exhibit 4(a) of the Company's
Annual Report on Form 10-K dated March 24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global
Fixed Rate) (incorporated by reference to Exhibit
4(b) of the Company's Annual Report on Form 10-K
dated March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference
to Exhibit 19(a) of the Company's report on Form
8-K dated October 27, 1986)
10(b) Form of Deferred Compensation Agreement
(incorporated by reference to Exhibit 19(b) of
the Company's report on Form 8-K dated October 27,
1986)
10(c) Form of Salary Continuation Agreement (incorporated
by reference to Exhibit 19(c) of the Company's
report on Form 8-K dated October 27, 1986)
-9-
10(d) 1994 Shareholders' Agreement dated as of the 15th
day of September 1994 among Etablissements Delhaize
Freres et Cie "Le Lion" S.A., Delhaize The Lion
America, Inc., and the Company (incorporated by
reference to Exhibit 10 of the Company's Report on
Form 8-K dated October 7, 1994)
10(e) Proxy Agreement dated January 4, 1991 between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize the Lion, America, Inc.
(incorporated by reference to Exhibit 10(e) of
the Company's Annual Report on Form 10-K dated
March 25, 1991)
10(f) Annual Incentive Bonus Plan (incorporated by
reference to Exhibit 19(a) of the Company's
Annual Report on Form 10-K dated March 30, 1983)
10(g) Declaration of Amendment to the Company's Annual
Incentive Bonus Plan effective as of December 14,
1987 (incorporated by reference to Exhibit 10(h) of
the Company's Annual Report on Form 10-K dated
March 20, 1989)
10(h) Employment Agreement dated August 1, 1991 between
the Company and Tom E. Smith (incorporated by
reference to Exhibit 10(h) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(i) Retirement and Consulting Agreement dated May 1,
1991 between the Company and Jerry W. Helms
(incorporated by reference to Exhibit 10(i) of the
Company's Annual Report on Form 10-K dated March
24, 1992)
10(j) Stock Purchase Agreement dated June 30, 1981
between the Company and Ralph W. Ketner
(incorporated by reference to Exhibit 10(j) of
the Company's Annual Report on Form 10-K dated
April 1, 1987)
10(k) Amended and Restated Food Lion, Inc. 1983
Employee Stock Option Plan (incorporated by
reference to Exhibit 10(k) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(l) 1991 Employee Stock Option Plan of Food Lion,
Inc. (incorporated by reference to Exhibit 10(l) of
the Company's Annual Report on Form 10-K dated
March 24, 1992)
-10-
10(m) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith (incorporated by
reference to Exhibit 10(o) of the Company's
Annual Report on Form 10-K dated April 1, 1987)
10(n) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith issued May 25, 1988
(incorporated by reference to Exhibit 10(w) of the
Company's Annual report on Form 10-K dated March
20, 1989)
10(o) Letter Agreement dated May 10, 1990 between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's Annual
Report on Form 10-K dated March 25, 1991)
10(p) U.S. Distribution Agreement dated August 20, 1991
between the Company and Goldman, Sachs & Co. and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount of the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(q) $350,000,000 Revolving Credit Facility dated November
17, 1994, among the Company, and various banks and
Wachovia Bank of Georgia, N.A. and Nations Bank
of North Carolina, N.A. as Co-Agents and Wachovia
Bank of Georgia, N.A. as Administrative Agent 20-142
10(r) License Agreement between the Company and Etablissements
Delhaize Freres Et Cie "Le Lion" S.A. dated January 1, 1983
(incorporated by reference to Exhibit 10(t) of the Company's
Annual Report on Form 10-K dated March 31, 1994)
11 Computation of Earnings Per Share 143
13 Annual Report to Shareholders for the year
ended December 31, 1994 144-169
-11-
23 Consent of Independent Accountants 170
27 Financial Data Schedule 171-172
99 Undertaking of the Company to file exhibits
pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K 173
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K October 7, 1994
listing a) a new director and b) a new shareholders agreement.
-12-
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: By Tom E. Smith
Tom E. Smith
President, Chief Executive
Officer, Principal
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the
dates indicated.
Date: By Tom E. Smith
Tom E. Smith
President, Chief Executive
Officer, Principal
Executive Officer and Director
Date: By Pierre-Olivier Beckers
Pierre-Olivier Beckers
Director
Date: By Dan A. Boone
Dan A. Boone
Vice President of Finance,
Chief Financial Officer
Secretary, Principal
Financial Officer
Date: By Dr. Jacqueline K. Collamore
Dr. Jacqueline K. Collamore
Director
Date: By Charles de Cooman d'Herlinckhove
Charles de Cooman d'Herlinckhove
Director
Date: By William G. Ferguson
William G. Ferguson
Director
Date: By Dr. Bernard Franklin
Dr. Bernard Franklin
Director
-13-
Date: By Carol Herndon
Carol Herndon
Corporate Controller and
Director of Accounting
Date: By Margaret H. Kluttz
Margaret H. Kluttz
Director
Date: By Jacques LeClercq
Jacques LeClercq
Director
Date: By Gui de Vaucleroy
Gui de Vaucleroy
Director
Date: By John P. Watkins
John P. Watkins
Director
-14-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Food Lion, Inc.:
We have audited the financial statements of Food Lion, Inc.
as of December 31, 1994 and January 1, 1994, and for each of the
three fiscal years in the period ended December 31, 1994, which
financial statements are included on pages 11 through 19 of the
1994 Annual Report to Shareholders of Food Lion, Inc. and
incorporated by reference herein. We have also audited the
financial statement schedule listed in the index on page 8 of this
Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Food Lion, Inc. as of December 31, 1994 and January 1, 1994,
and the results of its operations and its cash flows for each of
the three fiscal years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
Charlotte, North Carolina
February 8, 1995
COOPERS & LYBRAND, L.L.P.
-15-
<TABLE>
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Balance at (1) Additions (2)
Beginning Charged to Charges to other Deductions- Balance at end
Description of Period Cost & Expenses accounts-describe describe of period
1994
<S> <C> <S> <C> <C>
Furniture, Fixtures & $ 24,177,600 A ( 3,162,738) $21,014,862
Equipment
Leasehold improvements 1,417,007 A ( 1,009,421) 407,586
Buildings 61,500,004 A ( 2,718,225) 58,781,779
Other liabilities 55,100,000 A ( 5,066,424) 50,033,576
Accrued expenses 28,305,389 A ( 995,215) 27,310,174
$170,500,000 $ (12,952,023) $157,547,977
1993
<S> <C> <C>
Furniture, Fixtures & $ 24,177,600 $24,177,600
Equipment
Leasehold improvements 1,417,007 1,417,007
Buildings 61,500,004 61,500,004
Other liabilities 55,100,000 55,100,000
Accrued expenses 28,305,389 28,305,389
$ $170,500,000 $170,500,000
(A) Represents provisions against the assets of stores closed in 1994 to reflect the estimated realizable value,
the present value of remaining rent payments on leased stores and other costs associated with the store closings such
as legal expenses and relocation expenses.
</TABLE>
-16-
EXHIBIT INDEX
to
ANNUAL REPORT ON FORM 10-K of
Food Lion, Inc.
For Year Ended December 31, 1994
Sequential
Exhibit No. Description
Page No.
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)
(incorporated by reference to Exhibit 3(a) of
the Company's Annual Report on Form 10-K dated
March 24, 1992)
3(b) Bylaws of the Company effective July 1, 1990
(incorporated by reference to Exhibit 3(c) of the
Company's Annual Report on Form 10-K dated March
25, 1991)
4(a) Indenture dated as of August 15, 1991 between the
Company and the Bank of New York, Trustee, providing
for the issuance of an unlimited amount of Debt Securities
in one or more series (incorporated by reference to Exhibit
4(a) of the Company's Annual Report on Form 10-K dated March
24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global Fixed
Rate) (incorporated by reference to Exhibit 4(b) of the
Company's Annual Report on Form 10-K dated March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference to Exhibit
19(a) of the Company's report on Form 8-K dated October 27,
1986)
10(b) Form of Deferred Compensation Agreement (incorporated by
reference to Exhibit 19(b) of the Company's report on Form
8-K dated October 27, 1986)
10(c) Form of Salary Continuation Agreement (incorporated by
reference to Exhibit 19(c) of the Company's report on Form
8-K dated October 27, 1986)
10(d) 1994 Shareholders' Agreement dated as of the 15th day of
September 1994 among Etablissements Delhaize Freres et Cie
"Le Lion" S.A., Delhaize The Lion America, Inc., and the
Company (incorporated by reference to Exhibit 10 of the
Company's Report on Form 8-K dated October 7, 1994)
-1-
10(e) Proxy Agreement dated January 4, 1991 between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize the Lion America, Inc. (incorporated
by reference to Exhibit 10(e) of the Company's Annual
Report on form 10-K dated March 25, 1991)
10(f) Annual Incentive Bonus Plan (incorporated by
reference to Exhibit 19(a) of the Company's
Annual Report on Form 10-K dated March 30, 1983)
10(g) Declaration of Amendment to the Company's Annual
Incentive Bonus Plan effective as of December 14,
1987 (incorporated by reference to Exhibit 10(h)
of the Company's Annual Report on Form 10-K dated
March 20, 1989)
10(h) Employment Agreement dated August 1, 1991 between
the Company and Tom E. Smith (incorporated by
reference to Exhibit 10(h) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(i) Retirement and Consulting Agreement dated May 1,
1991 between the Company and Jerry W. Helms
(incorporated by reference to Exhibit 10(i) of
the Company's Annual Report on Form 10-K dated
March 24, 1992)
10(j) Stock Purchase Agreement dated June 30, 1981 between
the Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(j) of the Company's Annual
Report on Form 10-K dated April 1, 1987)
10(k) Amended and Restated Food Lion, Inc. 1983 Employment
Stock Option Plan (incorporated by reference to
Exhibit 10(k) of the Company's Annual Report on Form
10-K dated March 24, 1992)
10(l) 1991 Employee Stock Option Plan of Food Lion, Inc.
(incorporated by reference to Exhibit 10(l) of the
Company's Annual Report on Form 10-K dated March 24,
1992)
10(m) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith (incorporated by reference
to Exhibit 10(o) of the Company's Annual Report on
Form 10-K dated April 1, 1987)
10(n) Split Dollar Life Insurance Agreement between
the Company and Tom E. Smith issued May 25, 1988
(incorporated by reference to Exhibit 10(w) of
the Company's Annual report on Form 10-K dated
March 20, 1989)
-2-
10(o) Letter Agreement dated May 10, 1990 between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's
Annual Report on Form 10-K dated March 25, 1991)
10(p) U.S. Distribution Agreement dated August 20, 1991
between the Company and Goldman, Sachs & Co and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount to the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(q) $350,000,000 Revolving Credit Facility dated November
17, 1994, among the Company, and various banks and
Wachovia Bank of Georgia, N.A. and Nations Bank
of North Carolina, N.A. as Co-Agents and Wachovia Bank of
Georgia, N.A. as Administrative Agent
10(r) License Agreement between the Company and Etablissements
Delhaize Freres Et Cie "Le Lion" S.A. dated January 1,
1983 (incorporated by reference to Exhibit 10(t) of the
Company's Annual Report on Form 10-K dated March 31, 1994)
11 Computation of Earnings Per Share
13 Annual Report to Shareholders for the year ended
December 31, 1994
23 Consent of Independent Accountants
27 Financial Data Schedule
99 Undertaking of the Company to file exhibits pursuant
to Item 601(b)(4)(iii)(A) of Regulation S-K
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K October 7, 1994
listing a) a new director and b) a new shareholders agreement.
-3-
$350,000,000.00
CREDIT AGREEMENT
dated as of
November 17, 1994
among
FOOD LION, INC.,
The Banks Listed Herein,
WACHOVIA BANK OF GEORGIA, N.A.
and
NATIONSBANK OF NORTH CAROLINA, N.A.
as Co-Agents
and
WACHOVIA BANK OF GEORGIA, N.A.
as Administrative Agent
TABLE OF CONTENTS
CREDIT AGREEMENT
Page
ARTICLE I
DEFINITIONS 1
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and
Determinations 16
SECTION 1.03. References 16
SECTION 1.04. Use of Defined Terms 16
SECTION 1.05. Terminology 16
SECTION 1.06. Subsidiary References 16
ARTICLE II
THE CREDITS 17
SECTION 2.01. Commitments to Lend 17
SECTION 2.02. Method of Borrowing Syndicated
Loans 17
SECTION 2.03. Money Market Loans 19
SECTION 2.04. Notes 23
SECTION 2.05. Maturity of Loans 24
SECTION 2.06. Interest Rates 24
SECTION 2.07. Fees 26
SECTION 2.08. Optional Termination or
Reduction of Commitments 26
SECTION 2.09. Mandatory Reduction and
Termination of Commitments 27
SECTION 2.10. Optional Prepayments 27
SECTION 2.11. Mandatory Prepayments 27
SECTION 2.12. General Provisions as to
Payments 27
SECTION 2.13. Computation of Interest and Fees 29
ARTICLE III
CONDITIONS TO BORROWINGS 29
SECTION 3.01. Conditions to First Borrowing 29
SECTION 3.02. Conditions to All Borrowings 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 31
SECTION 4.01. Corporate Existence and Power 31
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention 32
SECTION 4.03. Binding Effect 32
SECTION 4.04. Financial Information 32
SECTION 4.05. No Litigation 33
SECTION 4.06. Compliance with ERISA 33
SECTION 4.07. Compliance with Laws; Taxes 33
SECTION 4.08. Subsidiaries 33
SECTION 4.09. Not an Investment Company 34
SECTION 4.10. Ownership of Property; Liens 34
SECTION 4.11. No Default 34
SECTION 4.12. Full Disclosure 34
SECTION 4.13. Environmental Matters 34
SECTION 4.14. Capital Stock 35
SECTION 4.15. Margin Stock 35
SECTION 4.16. Insolvency 35
SECTION 4.17. Insurance 35
SECTION 4.18. Public Utility Holding Company
Act 36
ARTICLE V
COVENANTS 36
SECTION 5.01. Information 36
SECTION 5.02. Inspection of Property, Books
and Records 38
SECTION 5.03. Loans or Advances 38
SECTION 5.04. Investments 38
SECTION 5.05. Negative Pledge 39
SECTION 5.06. Maintenance of Existence 40
SECTION 5.07. Dissolution 40
SECTION 5.08. Consolidations, Mergers and
Sales of Assets 41
SECTION 5.09. Use of Proceeds 41
SECTION 5.10. Compliance with Laws; Payment of
Taxes 42
SECTION 5.11. Insurance 42
SECTION 5.12. Change in Fiscal Year 42
SECTION 5.13. Maintenance of Property 42
SECTION 5.14. Environmental Notices 43
SECTION 5.15. Environmental Matters 43
SECTION 5.16. Environmental Release 43
SECTION 5.17. Fixed Charges Coverage 43
SECTION 5.18. Ratio of Consolidated Debt to
Consolidated Total Capitalization 43
SECTION 5.19. Prepayment of Senior Note
Agreement 44
SECTION 5.20. Debt of Subsidiaries 44
ARTICLE VI
DEFAULTS 44
SECTION 6.01. Events of Default 44
SECTION 6.02. Notice of Default 47
ARTICLE VII
THE ADMINISTRATIVE AGENT 47
SECTION 7.01. Appointment; Powers and
Immunities 47
SECTION 7.02. Reliance by Administrative Agent 48
SECTION 7.03. Defaults 48
SECTION 7.04. Rights of Administrative Agent
as a Bank 49
SECTION 7.05. Indemnification 49
SECTION 7.06. CONSEQUENTIAL DAMAGES 50
SECTION 7.07. Payee of Note Treated as Owner 50
SECTION 7.08. Nonreliance on the
Administrative Agent,the Co-Agents
and Other Banks 50
SECTION 7.09. Failure to Act 50
SECTION 7.10. Resignation or Removal of
Administrative Agent and Co-Agents 51
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION 51
SECTION 8.01. Basis for Determining Interest
Rate Inadequate or Unfair 51
SECTION 8.02. Illegality 52
SECTION 8.03. Increased Cost and Reduced
Return 53
SECTION 8.04. Base Rate Loans Substituted for
Euro-Dollar Loans 54
SECTION 8.05. Compensation 55
SECTION 8.06. Replacement of Banks 56
ARTICLE IX
MISCELLANEOUS 56
SECTION 9.01. Notices 56
SECTION 9.02. No Waivers 57
SECTION 9.03. Expenses; Documentary Taxes 57
SECTION 9.04. Indemnification 57
SECTION 9.05. Sharing of Setoffs 58
SECTION 9.06. Amendments and Waivers 58
SECTION 9.07. No Margin Stock Collateral 59
SECTION 9.08. Successors and Assigns 59
SECTION 9.09. Confidentiality 62
SECTION 9.10. Representation by Banks 62
SECTION 9.11. Obligations Several 63
SECTION 9.12. Georgia Law 64
SECTION 9.13. Severability 64
SECTION 9.14. Interest 64
SECTION 9.15. Interpretation 65
SECTION 9.16. Waiver of Jury Trial; Consent to
Jurisdiction 65
SECTION 9.17. Counterparts 65
EXHIBIT A-1 Form of Syndicated Loan Note
EXHIBIT A-2 Form of Money Market Loan Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Banks
and the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Closing Certificate
EXHIBIT G Form of Compliance Certificate
EXHIBIT H Form of Money Market Quote Request
EXHIBIT I Form of Money Market Quote
EXHIBIT J Form of Subsidiary Guaranty
Schedule 4.08 Subsidiaries
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of November 17, 1994, among
FOOD LION, INC., the BANKS listed on the signature pages hereof,
WACHOVIA BANK OF GEORGIA, N.A. and NATIONSBANK OF NORTH CAROLINA,
N.A., as Co-Agents, and WACHOVIA BANK OF GEORGIA, N.A., as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in
this Section 1.01 shall, for all purposes of this Agreement and
any amendment hereto (except as herein otherwise expressly
provided or unless the context otherwise requires), have the
meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.06(c).
"Affiliate" of any relevant Person means (i) any Person
that directly, or indirectly through one or more intermediaries,
controls the relevant Person (a "Controlling Person"), (ii) any
Person (other than the relevant Person or a Subsidiary of the
relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other
than a Subsidiary of the relevant Person) of which the relevant
Person owns, directly or indirectly, 20% or more of the common
stock or equivalent equity interests. As used herein, the term
"control" means possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Administrative Agent" means Wachovia Bank of Georgia,
N.A., a national banking association, in its capacity as agent
for the Banks hereunder, and its successors and permitted assigns
in such capacity.
"Agent" means, as the context shall require, any one,
or more, or all of the Administrative Agent and the Co-Agents.
"Agent's Letter Agreement" means that certain letter
agreement, dated as of September 16, 1994, between the Borrower,
the Administrative Agent and Wachovia Bank of North Carolina,
N.A., relating to the structure of the Loans, and certain fees
from time to time payable by the Borrower to the Administrative
Agent, together with all amendments and supplements thereto.
"Aggregate Commitments" means the sum of all of the
Commitments.
"Agreement" means this Credit Agreement, together with
all amendments and supplements hereto.
"Amortization" means for any period the sum of all
amortization expenses of the Borrower and its Consolidated
Subsidiaries for such period, as determined in accordance with
GAAP.
"Applicable Margin" has the meaning set forth in
Section 2.06(a).
"Assignee" has the meaning set forth in Section
9.08(c).
"Assignment and Acceptance" means an Assignment and
Acceptance executed in accordance with Section 9.08(c) in the
form attached hereto as Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages
hereof as having a Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day,
the rate per annum equal to the higher as of such day of (i) the
Prime Rate, and (ii) 0.50% above the Federal Funds Rate. For
purposes of determining the Base Rate for any day, changes in the
Prime Rate or the Federal Funds Rate shall be effective on the
date of each such change.
"Base Rate Loan" means a Syndicated Loan to be made as
a Base Rate Loan pursuant to the applicable Notice of Borrowing
or Article VIII, as applicable.
"Borrower" means FOOD LION, INC., a North Carolina
corporation, and its successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks pursuant
to Article II. A Borrowing is a "Base Rate Borrowing" if such
Loans are Base Rate Loans or a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans. A Borrowing is a "Syndicated
Borrowing" if it is made pursuant to the procedure outlined in
Section 2.01. A Borrowing is a "Money Market Borrowing" if it is
made pursuant to the procedure outlined in Section 2.03.
"Capital Stock" means any nonredeemable capital stock
of the Borrower or any Consolidated Subsidiary (to the extent
issued to a Person other than the Borrower), whether common or
preferred.
"Capitalized Lease" shall mean any lease which is
required to be capitalized on a consolidated balance sheet of the
lessee and its subsidiaries in accordance with GAAP.
"Cash Available for Fixed Charges" for any period shall
mean the sum of (i) Consolidated Net Income during such period
plus (ii) Consolidated Fixed Charges, plus (iii) to the extent
deducted in determining Consolidated Net Income, (w) all
provisions for any Federal, state or other income taxes made by
the Borrower and its Subsidiaries during such period, (x)
Depreciation, (y) Amortization, and (z) non-cash charges (less
non-cash gains) of the Borrower and its Consolidated Subsidiaries
during such period.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental
Response Compensation and Liability Inventory System established
pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Certificate" has the meaning set forth in
Section 3.01(e).
"Closing Date" means November 17, 1994.
"Co-Agents" means Wachovia Bank of Georgia, N.A. and
NationsBank of North Carolina, N.A., in their capacity as co-
agents under this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor Federal tax code.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time
pursuant to Sections 2.01, 2.08 and 2.09.
"Compliance Certificate" has the meaning set forth in
Section 5.01(d).
"Consolidated Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Fixed Charges" for any period shall mean,
without duplication, on a consolidated basis the sum of (i) all
Rentals payable during such period by the Borrower and its
Consolidated Subsidiaries, and (ii) Consolidated Interest Expense
for such period of the Borrower and its Consolidated
Subsidiaries.
"Consolidated Interest Expense" for any period means
interest, whether expensed or capitalized, in respect of Debt of
the Borrower or any of its Consolidated Subsidiaries outstanding
during such period.
"Consolidated Net Income" for any period shall mean the
gross revenues of the Borrower and its Consolidated Subsidiaries
for such period less all expenses and other proper charges
(including taxes on income), determined on a consolidated basis
after eliminating earnings or losses attributable to outstanding
Minority Interests, but excluding in any event:
(a) any unusual or extraordinary gains or losses on
the sale or other disposition of Investments or fixed or
capital assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Consolidated
Subsidiary accrued prior to the date it became a
Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other
than a Consolidated Subsidiary), substantially all the
assets of which have been acquired in any manner by the
Borrower or any Consolidated Subsidiary, realized by such
corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other
than a Consolidated Subsidiary) with which the Borrower or a
Consolidated Subsidiary shall have consolidated or which
shall have merged into or with the Borrower or a
Consolidated Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings and losses of any business entity
(other than a Consolidated Subsidiary) in which the Borrower
or any Consolidated Subsidiary has an ownership interest
unless such net earnings shall have actually been received
by the Borrower or such Consolidated Subsidiary in the form
of cash distributions;
(g) any portion of the net earnings of any
Consolidated Subsidiary which for any reason is unavailable
for payment of dividends to the Borrower or any other
Consolidated Subsidiary;
(h) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(i) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(j) any gain arising from the acquisition of any
Capital Stock;
(k) any reversal of any contingency reserve except to
the extent that provision for such contingency reserve shall
have been made from income arising during such period;
provided, however, that any reversal of a contingency
reserve from a prior period shall only be excluded from
Consolidated Net Income to the extent that the aggregate
amount of such reversals exceed $10,000,000 during the
immediately preceding 4 Fiscal Quarters; and
(l) any other unusual or extraordinary gain or loss
(including, without limitation, store closings that are part of
the Borrower's business and financing plans for its 1994 Fiscal
Year described in the Borrower's 8-K dated January 7, 1994).
"Consolidated Net Worth" shall mean, as of the date of
any determination thereof, the Stockholder's Equity of the
Borrower.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which, in accordance
with GAAP, would be consolidated with those of the Borrower in
its consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or
reflected on the most recent consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP, of:
(A) Any surplus resulting from any write-up of
assets subsequent to January 1, 1994, other than write-ups of
assets resulting from the proper application of purchase
accounting methods in accordance with GAAP;
(B) All assets which would be treated as
intangible assets for balance sheet presentation purposes under
GAAP, including without limitation goodwill (whether representing
the excess of cost over book value of assets acquired, or
otherwise), trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and expense;
(C) To the extent not included in (B) of this
definition, any amount at which shares of Capital Stock of the
Borrower appear as an asset on the balance sheet of the Borrower
and its Consolidated Subsidiaries;
(D) Loans or advances to stockholders, directors,
officers or employees; and
(E) To the extent not included in (B) of this
definition, deferred expenses.
"Consolidated Total Assets" means, at any time, the
total assets of the Borrower and its Consolidated Subsidiaries,
determined on a consolidated basis, as set forth or reflected on
the most recent consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Consolidated Total Capitalization" shall mean as of
the date of any determination thereof, the sum of (a)
Consolidated Net Worth and (b) Consolidated Debt.
"Controlled Group" means all members of a controlled
group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of
the Code.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable and accrued
expenses arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under Capitalized Leases,
(v) all obligations of such Person to reimburse any bank or other
Person in respect of amounts payable under a banker's acceptance,
(vi) all Redeemable Preferred Stock of such Person (in the event
such Person is a corporation), (vii) all obligations of such
Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument,
(viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and
(ix) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Default Rate" means, with respect to any Loan, on any
day, the sum of 2% plus the higher of (i) the then highest
interest rate (including the Applicable Margin) which may be
applicable to any Syndicated Loans hereunder (regardless of
whether such type of Syndicated Loans are actually outstanding)
or (ii) the highest rate then applicable to any Money Market
Loans.
"Delhaize" shall mean Etablissements Delhaize Freres et
Cie "Le Lion" S.A., a Belgian corporation.
"Depreciation" means for any period the sum of all
depreciation expenses of the Borrower and its Consolidated
Subsidiaries for such period, as determined in accordance with
GAAP.
"Detla" shall mean Delhaize The Lion America, Inc., a
Delaware corporation.
"Dollars" or "$" means dollars in lawful currency of
the United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
Georgia are authorized by law to close.
"Environmental Authority" means any foreign, federal,
state, local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses,
permits, orders, approvals, notices, registrations or other legal
prerequisites for conducting the business of the Borrower or any
Subsidiary required by any Environmental Requirement.
"Environmental Judgments and Orders" means all
judgments, decrees or orders arising from or in any way
associated with any Environmental Requirements, whether or not
entered upon consent or written agreements with an Environmental
Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated
in a judgment, decree or order.
"Environmental Liabilities" means any liabilities,
whether accrued, contingent or otherwise, arising from and in any
way associated with any Environmental Requirements.
"Environmental Notices" means any written notice from
any Environmental Authority or by any other person or entity, of
possible or alleged noncompliance with or liability under any
Environmental Requirement, including without limitation any
written complaints, citations, demands or requests from any
Environmental Authority or from any other person or entity for
correction of any violation of any Environmental Requirement or
any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated
with any Environmental Requirement.
"Environmental Releases" means "releases" as defined in
CERCLA or under any applicable state or local environmental law
or regulation.
"Environmental Requirements" means any legal
requirement relating to health, safety or the environment and
applicable to the Borrower, any Subsidiary or the Properties,
including but not limited to any such requirement under CERCLA or
similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor law.
Any reference to any provision of ERISA shall also be deemed to
be a reference to any successor provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business
Day on which dealings in Dollar deposits are carried out in the
London interbank market.
"Euro-Dollar Loan" means a Syndicated Loan to be made
as a Euro-Dollar Loan pursuant to the applicable Notice of
Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.06(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the next higher 1/100th
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the
day for which such rate is to be determined is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day,
and (ii) if such rate is not so published for any day, the
Federal Funds Rate for such day shall be the average rate charged
to the Administrative Agent on such day on such transactions, as
determined by the Administrative Agent.
"Fiscal Quarter" means any fiscal quarter of the
Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles
applied on a basis consistent with those which, in accordance
with Section 1.02, are to be used in making the calculations for
purposes of determining compliance with the terms of this
Agreement.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or
services, to provide collateral security, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" includes, without limitation, (a)
solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, 42 U.S.C. 6901 et seq. and its
implementing regulations and amendments, or in any applicable
state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any
other petroleum product or by-product, including, crude oil or
any fraction thereof, or (d) pesticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
first, second, third, or sixth month thereafter, as the Borrower
may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall, subject to
paragraph (c) below, end on the last Euro-Dollar Business
Day of the appropriate subsequent calendar month; and
(c) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date;
provided, that no Borrowing shall be made if the proposed
Interest Period shall not end prior to the scheduled
Termination Date.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided, that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (b) below) which would
otherwise end on a day which is not a Domestic Business Day
shall be extended to the next succeeding Domestic Business
Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Money Market Borrowing, the period
commencing on the date of such Borrowing and ending on the Stated
Maturity Date or such other date or dates as may be specified in
the applicable Money Market Quote Request; provided, that:
(a) any Interest Period (subject to clause (b) below)
which would otherwise end on a day which is not a Domestic
Business Day shall be extended to the next succeeding
Domestic Business Day; and
(b) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after
the Termination Date.
"Investment" means any investment in any Person,
whether by means of purchase or acquisition of obligations or
securities of such Person, capital contribution to such Person,
loan or advance to such Person, making of a time deposit with
such Person, Guarantee or assumption of any obligation of such
Person or otherwise; provided, that, an account receivable held
by the Borrower which was generated in the ordinary course of the
Borrower's business shall not be deemed to be an Investment in
the account debtor responsible for such account receivable.
"Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof
(or identified on the signature pages hereof as its Lending
Office) or such other office as such Bank may hereafter designate
as its Lending Office by notice to the Borrower and the
Administrative Agent.
"Lien" means, with respect to any asset, any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge,
security interest, security title, preferential arrangement which
has the practical effect of constituting a security interest or
encumbrance, or encumbrance or servitude of any kind in respect
of such asset to secure or assure payment of a Debt or a
Guarantee, whether by consensual agreement or by operation of
statute or other law. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease or other title retention agreement
relating to such asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan, a
Syndicated Loan, or a Money Market Loan and "Loans" means Base
Rate Loans, Euro-Dollar Loans, Syndicated Loans, or Money Market
Loans, or any of them.
"Loan Documents" means this Agreement, the Notes, any
other document evidencing, relating to or securing the Loans, and
any other document or instrument delivered from time to time in
connection with this Agreement, the Notes or the Loans, as such
documents and instruments may be amended or supplemented from
time to time.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.06(c).
"Margin Stock" means "margin stock" as defined in
Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any
event, act, condition or occurrence of whatever nature (including
any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations,
business, properties or prospects of the Borrower and its
Consolidated Subsidiaries taken as a whole which could impair
the Borrower's ability to perform its obligations under the Loan
Documents, or (b) the rights and remedies of the Administrative
Agent or the Banks under the Loan Documents, or the ability of
the Borrower to perform its obligations under the Loan Documents
to which it is a party, as applicable.
"Minority Interests" shall mean any shares of stock of
any class of a Consolidated Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by the
Borrower and/or one or more of its Consolidated Subsidiaries.
"Money Market Loan Notes" means the promissory notes of
the Borrower, substantially in the form of Exhibit A-2,
evidencing the obligation of the Borrower to repay the Money
Market Loans, together with all amendments, consolidations,
modifications, renewals and supplements thereto.
"Money Market Loans" means Loans made pursuant to the
terms and conditions set forth in Section 2.03.
"Money Market Quote" has the meaning specified in
Section 2.03.
"Money Market Quote Request" has the meaning specified
in Section 2.03.
"Money Market Rate" has the meaning specified in
Section 2.03.
"Moody's" means Moody's Investors Service, Inc., a
Delaware corporation, and any successor thereto.
"Multiemployer Plan" shall have the meaning set forth
in Section 4001(a)(3) of ERISA.
"Notes" means, individually and collectively, as the
context shall require or permit, each of the Syndicated Loan
Notes and the Money Market Loan Notes.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Operating Lease" shall mean any lease other than a
Capitalized Lease.
"Participant" has the meaning set forth in Section
9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, a corporation, a
partnership (including, without limitation, a joint venture), an
unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is
either (i) maintained by a member of the Controlled Group for
employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or
has within the preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so
denominated and set by Wachovia from time to time as an interest
rate basis for borrowings. The Prime Rate is but one of several
interest rate bases used by Wachovia. Wachovia lends at interest
rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary,
wherever located.
"Quarterly Date" means each March 31, June 30,
September 30, and December 31.
"Quotation Date" has the meaning ascribed thereto in
Section 2.03.
"Rating Agencies" shall mean, collectively, Moody's and
Standard & Poor's.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior
to the Termination Date either (i) mandatorily redeemable (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.
"Regulation G" means Regulation G of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation T" means Regulation T of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by
the Borrower or a Consolidated Subsidiary, as lessee or sublessee
under an Operating Lease or Capitalized Lease of real or personal
property, but shall be exclusive of any amounts required to be
paid by the Borrower or a Consolidated Subsidiary (whether or not
designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges.
Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any,
required to be paid by the lessee regardless of sales volume or
gross revenues.
"Required Banks" means at any time Banks having at
least 66 2/3% of the Aggregate Commitments or, if the Commitments
are no longer in effect, Banks holding at least 66 2/3% of the
aggregate outstanding principal amount of the sum of
(i) Syndicated Loan Notes and (ii) Money Market Loan Notes.
"Senior Debt Rating" means, as of any date of
determination, the rating assigned by Moody's and Standard &
Poor's to the long-term senior unsecured obligations of the
Borrower (which obligations have not been enhanced by letters of
credit or similar means).
"Senior Note Agreement" means any one, or more, or all,
as the context shall require of those certain Note Agreements,
dated as of May 1, 1993, as amended, among the Borrower and
certain purchasers of the Borrower's senior notes named therein
and signatories thereto.
"Shareholder Agreement" means the Shareholder Agreement
dated as of September 15, 1994 among Delhaize, Detla and the
Borrower.
"Standard & Poor's" means Standard & Poor's Ratings
Group, a division of McGraw-Hill, Inc., and any successor
thereto.
"Stated Maturity Date" means, with respect to any Money
Market Loan, the Stated Maturity Date therefor specified by the
Bank in the applicable Money Market Quote.
"Stockholder's Equity" means, at any time, the
shareholders' equity of the Borrower and its Consolidated
Subsidiaries, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries. Shareholders' equity shall include,
but not be limited to (i) the par or stated value of all
outstanding Capital Stock, (ii) capital surplus, (iii) retained
earnings, and (iv) various deductions such as (A) purchases of
treasury stock, (B) valuation allowances, (C) receivables due
from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments
for foreign currency transactions.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Borrower.
"Subsidiary Guarantor" means any Subsidiary which
executes and delivers to the Administrative Agent a Subsidiary
Guaranty, together with, with respect thereto, (i) an opinion of
counsel in substantially the form of Exhibit B, and documents of
the type described in paragraph (g) of Section 3.01, in each case
with appropriate modifications, and in the case of the
certificate of good standing referred to in clause (iii) of such
paragraph (g), issued by the Secretary of State of the state of
incorporation of such Subsidiary.
"Subsidiary Guaranty" means a guaranty of payment,
substantially in the form of Exhibit J, executed by a Subsidiary
in favor of the Administrative Agent, for the benefit of the
Banks, pursuant to which such Subsidiary irrevocably Guarantees
payment of all obligations of the Borrower under this Agreement,
the Notes and the other Loan Documents.
"Syndicated Loan Notes" means promissory notes of the
Borrower, substantially in the form of Exhibit A-1, evidencing
the obligation of the Borrower to repay the Syndicated Loans,
together with all amendments, consolidations, modifications,
renewals, and supplements thereto.
"Syndicated Loans" means Loans made pursuant to the
terms and conditions set forth in Section 2.02.
"Termination Date" means November 17, 1999.
"Third Parties" means all lessees, sublessees,
licensees and other users of the Properties, excluding those
users of the Properties in the ordinary course of the Borrower's
business and on a temporary basis.
"Transferee" has the meaning set forth in Section
9.08(d).
"Unused Commitment" means at any date, with respect to
any Bank, an amount equal to its Commitment less the aggregate
outstanding principal amount of its Syndicated Loans.
"Wachovia" means Wachovia Bank of North Carolina, N.A.,
a national banking association, and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of
the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared,
in accordance with GAAP, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public
accountants or otherwise required by a change in GAAP) with the
most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Banks
unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower
shall have objected to determining such compliance on such basis
at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after
the delivery of such financial statements, in either of which
events such calculations shall be made on a basis consistent with
those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements
delivered under Section 5.01, shall mean the financial statements
referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits",
"Schedules", "Sections" and other Subdivisions are references to
articles, exhibits, schedules, sections and other subdivisions
hereof.
SECTION 1.04. Use of Defined Terms. All terms defined
in this Agreement shall have the same defined meanings when used
in any of the other Loan Documents, unless otherwise defined
therein or unless the context shall require otherwise.
SECTION 1.05. Terminology. All personal pronouns used
in this Agreement, whether used in the masculine, feminine or
neuter gender, shall include all other genders; the singular
shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are
for convenience only, and neither limit nor amplify the
provisions of this Agreement.
SECTION 1.06. Subsidiary References. All references
contained in this Agreement or in any other Loan Document to
"Subsidiary", "Consolidated" or "consolidated" shall be without
meaning unless and until the Borrower shall have a Subsidiary.
These references remain in this Agreement for the purpose of
allowing the Borrower future operating flexibility with respect
to the creation of Subsidiaries.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally
agrees, on the terms and conditions set forth herein, to make
Syndicated Loans to the Borrower from time to time before the
Termination Date; provided that, immediately after each such
Syndicated Loan is made, the aggregate principal amount of
Syndicated Loans by such Bank shall not exceed the amount of its
Commitment. Each Syndicated Borrowing under this Section shall
be in an aggregate principal amount of $5,000,000 or any larger
multiple of $1,000,000 (except that any such Syndicated Borrowing
may be in the aggregate amount of the Unused Commitments) and
shall be made from the several Banks ratably in proportion to
their respective Commitments. The aggregate amount of Unused
Commitments available for Syndicated Loans shall be reduced
automatically by the aggregate principal amount of all Money
Market Loans outstanding under Section 2.03, but the Money Market
Loans of a Bank shall not reduce such Bank's pro rata share of
the aggregate Unused Commitments; provided, that, notwithstanding
the foregoing, the Borrower may repay Money Market Loans with
Syndicated Loans. Within the foregoing limits, the Borrower may
borrow under this Section, repay or, to the extent permitted by
Section 2.10, prepay Syndicated Loans under this Section at any
time before the Termination Date.
SECTION 2.02. Method of Borrowing Syndicated Loans.
(a) The Borrower shall give the Administrative Agent notice (a
"Notice of Borrowing"), which shall be substantially in the form
of Exhibit E, on the same day for a Base Rate Borrowing, and at
least 2 Euro-Dollar Business Days before each Euro-Dollar
Borrowing (all such Notices of Borrowing being effective on the
day delivered so long as the Administrative Agent shall have
received same prior to 11:00 A.M., Atlanta, Georgia time),
specifying:
(i) the date of such Syndicated Borrowing, which shall
be a Domestic Business Day in the case of a Base Rate
Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,
(ii) the aggregate amount of such Syndicated Borrowing,
(iii) whether the Syndicated Loans comprising such
Syndicated Borrowing are to be Base Rate Loans or Euro-
Dollar Loans, and
(iv) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest
Period.
(b) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(c) Not later than 2:00 P.M. (Atlanta, Georgia time) on
the date of each Syndicated Borrowing, each Bank shall (except as
provided in paragraph (d) of this Section) make available its
ratable share of such Syndicated Borrowing, in Federal or other
funds immediately available in Atlanta, Georgia, to the
Administrative Agent at its address for payments referred to in
Section 9.01. Unless the Administrative Agent determines that
any applicable condition specified in Article III has not been
satisfied, the Administrative Agent will make the funds so
received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address. Unless the
Administrative Agent receives notice from a Bank, at the
Administrative Agent's address for payments referred to in or
specified pursuant to Section 9.01, (i) in the case of a Base
Rate Borrowing, no later than 1:00 P.M. (local time at such
address) on the same day as such Base Rate Borrowing and (ii) in
the case of a Euro-Dollar Borrowing, no later than 1:00 P.M.
(local time at such address) on the Domestic Business Day before
the date of a Syndicated Borrowing, stating that such Bank will
not make a Syndicated Loan in connection with such Borrowing, the
Administrative Agent shall be entitled to assume that such Bank
will make a Syndicated Loan in connection with such Syndicated
Borrowing and, in reliance on such assumption, the Administrative
Agent may (but shall not be obligated to) make available such
Bank's ratable share of such Syndicated Borrowing to the Borrower
for the account of such Bank. If the Administrative Agent makes
such Bank's ratable share available to the Borrower and such Bank
does not in fact make its ratable share of such Syndicated
Borrowing available on such date, the Administrative Agent shall
be entitled to recover such Bank's ratable share from such Bank
or the Borrower (and for such purpose shall be entitled to charge
such amount to any account of the Borrower maintained with the
Administrative Agent), together with interest thereon for each
day during the period from the date of such Syndicated Borrowing
until such sum shall be paid in full at a rate per annum equal to
the rate at which the Administrative Agent determines that it
obtained (or could have obtained) overnight Federal funds to
cover such amount for each such day during such period, provided
that any such payment by the Borrower of such Bank's ratable
share and interest thereon shall be without prejudice to any
rights that the Borrower may have against such Bank. If the
Administrative Agent does not exercise its option to advance
funds for the account of such Bank, it shall forthwith notify the
Borrower of such decision. The failure of any Bank to advance
its ratable share of any Syndicated Borrowing (other than by
reason of a Default or Event of Default) shall not release,
modify or terminate the obligations of the Administrative Agent
and the other Banks under this Agreement.
(d) If any Bank makes a new Syndicated Loan hereunder
on a day on which the Borrower is to repay all or any part of an
outstanding Syndicated Loan from such Bank, such Bank shall apply
the proceeds of its new Syndicated Loan to make such repayment
and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made
available by such Bank to the Administrative Agent as provided in
paragraph (c) of this Section, or remitted by the Borrower to the
Administrative Agent as provided in Section 2.12, as the case may
be.
(e) Notwithstanding anything to the contrary contained
in this Agreement, including, without limitation Section 2.01 and
Section 2.03, no Euro-Dollar Borrowing or Money Market Borrowing
may be made if there shall have occurred a Default, which Default
shall not have been cured or waived.
(f) In the event that a Notice of Borrowing fails to
specify whether the Syndicated Loans comprising such Syndicated
Borrowing are to be Base Rate Loans or Euro-Dollar Loans, such
Syndicated Loans shall be made as Base Rate Loans. If the
Borrower is otherwise entitled under this Agreement to repay any
Syndicated Loans maturing at the end of an Interest Period
applicable thereto with the proceeds of a new Syndicated
Borrowing, and the Borrower fails to repay such Syndicated Loans
using its own moneys and fails to give a Notice of Borrowing in
connection with such new Syndicated Borrowing, a new Syndicated
Borrowing shall be deemed to be made on the date such Syndicated
Loans mature in an amount equal to the principal amount of the
Syndicated Loans so maturing, and the Syndicated Loans comprising
such new Syndicated Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary
contained herein, including, without limitation, Section 2.01 and
Section 2.03, there shall not be more than 8 tranches of Euro-
Dollar Borrowings and/or Money Market Borrowings outstanding at
any given time.
SECTION 2.03. Money Market Loans. (a) In addition to
making Syndicated Borrowings available to the Borrower, the
Borrower may, as set forth in this Section 2.03, and for so long
as the Borrower's Senior Debt Rating is either BBB- (or better)
by Standard & Poor's or Baa3 (or better) by Moody's, request the
Banks to make offers to make Money Market Borrowings available to
the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in
this Section 2.03, provided that:
(i) there may be no more than 8 tranches of
Euro-Dollar Borrowings and/or Money Market Borrowings
outstanding at any given time; and
(ii) the aggregate principal amount of all Money Market
Loans together with the aggregate principal amount of all
Syndicated Loans, at any one time outstanding shall not
exceed the Aggregate Commitments at such time.
(b) When the Borrower wishes to request offers to make
Money Market Loans, the Borrower shall give the Administrative
Agent (which shall promptly notify the Banks) notice
substantially in the form of Exhibit H hereto (a "Money Market
Quote Request") so as to be received no later than 11:00 A.M.
(Atlanta, Georgia time) at least 2 Domestic Business Days prior
to the date of the Money Market Borrowing proposed therein (or
such other time and date as the Borrower and the Administrative
Agent, with the consent of the Required Banks, may agree),
specifying:
(i) the proposed date of such Money Market Borrowing,
which shall be a Domestic Business Day (the "Quotation
Date");
(ii) the maturity date (or dates) (each a "Stated
Maturity Date") for repayment of each Money Market Loan to
be made as part of such Money Market Borrowing (which Stated
Maturity Date shall be that date, at the election of the
Borrower, occurring not less than 7 days but not exceeding
180 days from the date of such Money Market Borrowing);
provided, that the Stated Maturity Date for any Money Market
Loan may not extend beyond the Termination Date; and
(iii) the aggregate amount of principal to be received
by the Borrower as a result of such Money Market Borrowing,
which shall be at least $10,000,000 (and in larger integral
multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated.
The Borrower may request offers to make Money Market Loans having
up to 3 different Stated Maturity Dates in a single Money Market
Quote Request; provided that the request for each separate Stated
Maturity Date shall be deemed to be a separate Money Market Quote
Request for a separate Money Market Borrowing. Except as
provided in the immediately preceding sentence, the Borrower
shall not deliver a Money Market Quote Request more frequently
than once every 5 Domestic Business Days.
(c) (i) Each Bank may, but shall have no obligation
to, submit a response containing an offer to make a Money
Market Loan substantially in the form of Exhibit I hereto (a
"Money Market Quote") in response to any Money Market Quote
Request; provided, that, if the Borrower's request under
Section 2.03(b) specified more than 1 Stated Maturity Date,
such Bank may, but shall have no obligation to, make a
single submission containing a separate offer for each such
Stated Maturity Date and each such separate offer shall be
deemed to be a separate Money Market Quote. Each Money
Market Quote must be submitted to the Administrative Agent
not later than 10:00 A.M. (Atlanta, Georgia time) on the
Quotation Date (or such other time and date as the Borrower
and the Administrative Agent, with the consent of the
Required Banks, may agree); provided that any Money Market
Quote submitted by Wachovia may be submitted, and may only
be submitted, if Wachovia notifies the Borrower of the terms
of the offer contained therein not later than 9:45 A.M.
(Atlanta, Georgia time) on the Quotation Date (or 15 minutes
prior to the time that the other Banks must have submitted
their respective Money Market Quotes). Subject to Section
6.01, any Money Market Quote so made shall be irrevocable
except with the written consent of the Administrative Agent
given on the written instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed date of the Money Market
Borrowing, the Stated Maturity Date therefor, and the
date (or dates) that interest shall be due and payable
if interest payments shall be required other than on
the relevant Stated Maturity Date;
(B) the minimum and maximum principal
amounts, of the Money Market Borrowing which the
quoting Bank is willing to make for the applicable
Money Market Quote, which principal amounts (x) may be
greater than or less than the Commitment of the quoting
Bank, (y) shall be at least $5,000,000 or a larger
integral multiple of $1,000,000, and (z) may not exceed
the principal amount of the Money Market Borrowing for
which offers were requested;
(C) the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%)
offered for each such Money Market Loan (the "Money
Market Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Administrative Agent and the
Borrower, no Money Market Quote shall contain qualifying,
conditional or similar language or propose terms other than
or in addition to those set forth in the applicable Money
Market Quote Request (other than setting forth the minimum
and maximum principal amounts of the Money Market Loan which
the quoting Bank is willing to make for the applicable
Stated Maturity Date) and, in particular, no Money Market
Quote may be conditioned upon acceptance by the Borrower of
all (or some specified minimum) of the principal amount of
the Money Market Loan for which such Money Market Quote is
being made.
(d) The Administrative Agent shall as promptly as
practicable after the Money Market Quote is submitted (but in any
event not later than 11:00 A.M. (Atlanta, Georgia time) on the
Quotation Date) notify the Borrower of the terms (i) of any Money
Market Quote submitted by a Bank that is in accordance with
Section 2.03(c) and (ii) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money
Market Quote submitted by such Bank with respect to the same
Money Market Quote Request. Any such subsequent Money Market
Quote shall be disregarded by the Administrative Agent unless
such subsequent Money Market Quote is submitted solely to correct
a manifest error in such former Money Market Quote. The
Administrative Agent's notice to the Borrower shall specify (A)
the minimum and maximum aggregate principal amounts of the Money
Market Borrowing for which offers have been received and (B) the
respective minimum and maximum principal amounts and Money Market
Rates so offered by each Bank (identifying the Bank that made
each Money Market Quote).
(e) Not later than 12:00 P.M. (Atlanta, Georgia time)
on the Quotation Date (or such other time and date as the
Borrower and the Administrative Agent, with the consent of the
Required Banks, may agree), the Borrower shall notify the
Administrative Agent of its acceptance or nonacceptance of the
offers so notified to it pursuant to Section 2.03(d) and the
Administrative Agent shall promptly notify each affected Bank.
In the case of acceptance, such notice shall specify the
aggregate principal amount of offers (for each Stated Maturity
Date) that are accepted. The Borrower may accept any Money
Market Quote in whole or in part (provided that any Money Market
Quote accepted in part from any Bank shall not be less than the
amount set forth in the Money Market Quote of such Bank as the
minimum principal amount of the Money Market Loan such Bank was
willing to make for the applicable Stated Maturity Date);
provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request;
(ii) the aggregate principal amount of each Money
Market Borrowing shall be at least $5,000,000 (and in larger
multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the
Administrative Agent has advised the Borrower that such
offer fails to comply with Section 2.03(c)(ii) or otherwise
fails to comply with the requirements of this Agreement
(including without limitation, Section 2.03(a)).
If offers are made by 2 or more Banks with the same Money Market
Rates for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Stated
Maturity Date, the principal amount of Money Market Loans in
respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible (in multiples
of $100,000) in proportion to the aggregate principal amount of
such offers. Determinations by the Borrower of the amounts of
Money Market Loans shall be conclusive in the absence of manifest
error.
(f) Any Bank whose offer to make any Money Market Loan
has been accepted shall, not later than 1:30 P.M. (Atlanta,
Georgia time) on the Quotation Date, make the appropriate amount
of such Money Market Loan available to the Administrative Agent
at its address referred to in Section 9.01 in immediately
available funds. The amount so received by the Administrative
Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by
depositing the same, in immediately available funds, in an
account of the Borrower maintained with Wachovia.
SECTION 2.04. Notes. (a) The Syndicated Loans of each
Bank shall be evidenced by a single Syndicated Loan Note payable
to the order of such Bank for the account of its Lending Office
in an amount equal to the original principal amount of such
Bank's Commitment.
(b) The Money Market Loans made by any Bank to the
Borrower shall be evidenced by a single Money Market Note payable
to the order of such Bank for the account of its Lending Office
in the principal amount of the Aggregate Commitments.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01, the Administrative Agent shall deliver such Note to
such Bank. Each Bank shall record, and prior to any transfer of
its Note shall endorse on the schedule forming a part thereof
appropriate notations to evidence the date, amount and maturity
of each Loan made by it, the date and amount of each payment of
principal made by the Borrower with respect thereto and whether
such Loan is a Base Rate Loan or Euro-Dollar Loan, and such
schedule shall constitute rebuttable presumptive evidence of the
principal amount owing and unpaid on such Bank's Note; provided
that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligation of the Borrower
hereunder or under the Notes. Within 10 Domestic Business Day's
of the Borrower's request, any Bank shall furnish to the Borrower
a copy of the schedule referred to in the immediately preceding
sentence. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Notes and to attach to and make a part
of any Note a continuation of any such schedule as and when
required.
SECTION 2.05. Maturity of Loans. (a) Each Syndicated
Loan included in any Syndicated Borrowing shall mature, and the
principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Syndicated
Borrowing.
(b) Each Money Market Loan included in any Money Market
Borrowing shall mature, and the principal amount thereof shall be
due and payable upon the Stated Maturity Date therefor.
(c) The outstanding principal amount of the Loans
together with all accrued but unpaid interest thereon, if any,
shall be due and payable on the Termination Date.
SECTION 2.06. Interest Rates. (a) "Applicable Margin"
means (i) for any Base Rate Loan, 0%, and (ii) for any
Euro-Dollar Loan, at any time when the Senior Debt Rating is
(u) A (or better) by Standard & Poor's and A2 (or better) by
Moody's, 0.20%, (v) either A- by Standard & Poor's or A3 by
Moody's, 0.225%, (w) BBB+ by Standard & Poor's or Baa1 by
Moody's, 0.275%, (x) either BBB by Standard & Poor's or Baa2 by
Moody's, 0.325%, (y) either BBB- by Standard & Poor's or Baa3 by
Moody's, 0.45%, and (z) either BB+ by Standard & Poor's or Ba1 by
Moody's, 0.70%. In determining the Applicable Margin in all
cases above except for clause (u), the higher Senior Debt Rating
shall be controlling (provided, that, if the Senior Debt Rating
issued by only one of the two Rating Agencies would qualify the
Borrower for the pricing set forth on clause (u) above, then,
pricing shall be determined by clause (v) above). Should either
(x) the Senior Debt Rating be other than any of the foregoing
combinations or (y) Standard & Poor's or Moody's cease to provide
a Senior Debt Rating, then interest on the Loans shall be
determined by clause (z) above. The Applicable Margin shall be
adjusted on the date on which any change in the Senior Debt
Rating occurs.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date
such Loan is made until it is repaid, at a rate per annum equal
to the Base Rate for such day plus the Applicable Margin. Such
interest shall be payable on the last day of each calendar month.
Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate
per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin plus the applicable Adjusted London Interbank
Offered Rate for such Interest Period. Such interest shall be
payable for each Interest Period on the last day thereof;
provided, that if the Interest Period is 6 months, interest shall
be payable on the last day of the third month thereof and on the
last day thereof. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next
higher 1/100th of 1%) by dividing (i) the applicable London
Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such
Euro-Dollar Loan, the rate per annum determined on the basis of
the offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan
offered for a term comparable to such Interest Period, which
rates appear on the Reuters Screen LIBO Page as of 11:00 A.M.,
London time, 2 Euro-Dollar Business Days prior to the first day
of such Interest Period, provided that (i) if more than 1 such
offered rate appears on the Reuters Screen LIBO Page, the "London
Interbank Offered Rate" will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of such
offered rates; (ii) if no such offered rates appear on such page,
the "London Interbank Offered Rate" for such Interest Period will
be the arithmetic average (rounded upward, if necessary, to the
next higher 1/100th of 1%) of rates quoted by not less than 2
major banks in New York City, selected by the Administrative
Agent, at approximately 10:00 A.M., New York City time, 2
Euro-Dollar Business Days prior to the first day of such Interest
Period, for deposits in Dollars offered to leading European banks
for a period comparable to such Interest Period in an amount
comparable to the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date
such Money Market Loan is made until it becomes due, at a rate
per annum equal to the applicable Money Market Rate set forth in
the relevant Money Market Quote. Such interest shall be payable
at the time (or times) specified in the relevant Money Market
Quote for such Money Market Loan, or, if no such time is
specified, on the Stated Maturity Date thereof.
(e) The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The
Administrative Agent shall give prompt notice to the Borrower and
the Banks by telecopier of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence
of manifest error.
(f) After the occurrence and during the continuance of
a Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may,
at the election of the Required Banks, bear interest at the
Default Rate.
SECTION 2.07. Fees. (a) The Borrower shall pay to the
Administrative Agent for the ratable account of each Bank an
aggregate facility fee (the "Facility Fee") equal to the product
of (i) the average aggregate amount of the Commitments in
existence during any relevant period, irrespective of usage,
times (ii) the following applicable percentage: at any time when
the Senior Debt Rating is (u) A (or better) by Standard & Poor's
and A2 (or better) by Moody's, 0.10%, (v) either A- by Standard &
Poor's or A3 by Moody's, 0.125%, (w) either BBB+ by Standard &
Poor's or Baa1 by Moody's, 0.15%, (x) either BBB by Standard &
Poor's or Baa2 by Moody's, 0.175%, (y) either BBB- by Standard &
Poor's or Baa3 by Moody's, 0.20%, and (z) BB+ by Standard &
Poor's or Ba1 by Moody's, 0.30%. Should either (x) the Senior
Debt Rating be other than any of the foregoing combinations or
(y) Standard & Poor's and Moody's cease to provide a Senior Debt
Rating, then the Facility Fee shall be determined by clause (z)
above. In determining the appropriate Facility Fee in all cases
above except for clause (u), the higher Senior Debt Rating shall
be controlling (provided, that, if the Senior Debt Rating issued
by only one of the two Rating Agencies would qualify the Borrower
for the pricing set forth in clause (u) above, then, pricing
shall be determined by clause (v) above). The Facility Fee shall
be adjusted on the date on which any change in the Senior Debt
Rating occurs. The Facility Fee shall accrue at all times from
and including the Closing Date to but excluding the Termination
Date and shall be payable in arrears, on each Quarterly Date and
on the Termination Date.
(b) The Borrower shall pay to the Administrative
Agent, for the account and sole benefit of the Administrative
Agent, such fees and other amounts at such times as set forth in
the Agent's Letter Agreement.
SECTION 2.08. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least 3 Domestic Business
Days' notice to the Administrative Agent, terminate at any time,
or proportionately reduce the Unused Commitments from time to
time by an aggregate amount of at least $5,000,000 or any larger
multiple of $1,000,000. If the Commitments are terminated in
their entirety, all accrued fees (as provided under Section 2.07)
shall be due and payable on the effective date of such
termination.
SECTION 2.09. Mandatory Reduction and Termination of
Commitments. The Commitments shall terminate on the Termination
Date and any Loans then outstanding (together with accrued
interest thereon) shall be due and payable on such date.
SECTION 2.10. Optional Prepayments. (a) The Borrower
may, upon at least (x) 1 Domestic Business Days' notice, with
respect to Base Rate Loans, and (y) 2 Euro-Dollar Business Days'
Notice, with respect to Euro-Dollar Loans, (which notice in each
case may specify which Borrowings are to be prepaid) to the
Administrative Agent, and payment to the Administrative Agent,
for the ratable benefit of the Banks, of any amounts that may be
required in connection with Euro-Dollar Borrowings by Section
8.05, prepay any Borrowing (to the extent not precluded by
Section 2.10(b)) in whole at any time, or from time to time in
part in amounts aggregating at least $5,000,000, or any larger
multiple of $1,000,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such
relevant Borrowing.
(b) The Borrower may not prepay all or any portion of
the principal amount of any Money Market Loan prior to the
relevant Stated Maturity Date therefor.
(c) Upon receipt of a notice of prepayment pursuant to
this Section 2.10, the Administrative Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share of such prepayment and such notice shall not thereafter be
revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments. On each date on
which the Commitments are reduced pursuant to Section 2.08 or
Section 2.09, the Borrower shall repay or prepay such principal
amount of the outstanding Loans, if any (together with interest
accrued thereon), as may be necessary so that after such payment
the aggregate unpaid principal amount of the Loans does not
exceed the aggregate amount of the Commitments as then reduced.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of facility fees hereunder, not later
than 12:00 P.M. (Atlanta, Georgia time) on the date when due, in
Federal or other funds immediately available in Atlanta, Georgia,
to the Administrative Agent at its address for payments referred
to in Section 9.01. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Administrative Agent for the account of the
Banks.
(b) Whenever any payment of principal of, or interest
on, the Base Rate Loans or Money Market Loans or of fees
hereunder shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of
principal of or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Dollar Business
Day.
(c) All payments of principal, interest and fees and
all other amounts to be made by the Borrower pursuant to this
Agreement with respect to any Loan or fee relating thereto shall
be paid without deduction for, and free from, any tax, imposts,
levies, duties, deductions, or withholdings of any nature now or
at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of
each Bank, U.S. income taxes and taxes imposed on or measured by
its net income, taxes on capital, profits or gains, and franchise
taxes imposed on it, by the jurisdiction under the laws of which
such Bank (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed
on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes,
imposts, levies, duties, deductions or withholdings of any nature
being "Taxes"). In the event that the Borrower is required by
applicable law to make any such withholding or deduction of Taxes
with respect to any Loan or fee or other amount, the Borrower
shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which
such deduction or withholding is made all receipts and other
documents evidencing such payment and shall pay to such Bank
additional amounts as may be necessary in order that the amount
received by such Bank after the required withholding or other
payment shall equal the amount such Bank would have received had
no such withholding or other payment been made. If no
withholding or deduction of Taxes are payable in respect to any
Loan or fee relating thereto, the Borrower shall furnish, at the
Agent's request, a certificate from each applicable taxing
authority or an opinion of counsel acceptable to such, in either
case stating that such payments are exempt from or not subject to
withholding or deduction of Taxes. If the Borrower fails to
provide such original or certified copy of a receipt evidencing
payment of Taxes or certificate(s) or opinion of counsel of
exemption, the Borrower hereby agrees to compensate such Bank
for, and indemnify them with respect to, the tax consequences of
the Borrower's failure to provide evidence of tax payments or tax
exemption.
Each Bank agrees, as soon as practicable after receipt
by it of a request by the Borrower to do so, to file all
appropriate forms and take other appropriate action to obtain a
certificate or other appropriate document from the appropriate
governmental authority in the jurisdiction imposing the relevant
Taxes, establishing that it is entitled to receive payments of
principal and interest under this Agreement and the Notes without
deduction and free from withholding of any Taxes imposed by such
jurisdiction; provided, that, if it is unable, for any reason, to
establish such exemption, or to file such forms and, in any
event, during such period of time as such request for exemption
is pending, the Borrower shall nonetheless remain obligated under
the terms of the immediately preceding paragraph.
In the event any Bank receives a refund of any Taxes
paid by the Borrower pursuant to this Section 2.12(c), it will
pay to the Borrower the amount of such refund promptly upon
receipt thereof; provided, however, if at any time thereafter it
is required to return such refund, the Borrower shall promptly
repay to it the amount of such refund.
Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower and the Banks contained in this
Section 2.12(c) shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations
required by such provisions (i) shall be made based upon the
circumstances of such Participant, Assignee or other Transferee,
and (ii) constitute a continuing agreement and shall survive the
termination of this Agreement and the payment in full or
cancellation of the Notes.
SECTION 2.13. Computation of Interest and Fees.
Interest on the Loans shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the
first day thereof to but excluding the last day thereof.
Facility fees and any other fees from time to time payable
hereunder shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the
first day but excluding the last day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The
obligation of each Bank to make a Syndicated Loan on the occasion
of the first Syndicated Borrowing is subject to the satisfaction
of the conditions set forth in Section 3.02 and receipt by the
Administrative Agent of the following (in sufficient number of
counterparts (except as to the Notes) for delivery of a
counterpart to each Bank and retention of one counterpart by the
Administrative Agent):
(a) from each of the parties hereto of either (i) a
duly executed counterpart of this Agreement signed by such
party or (ii) a facsimile transmission stating that such
party has duly executed a counterpart of this Agreement and
sent such counterpart to the Administrative Agent;
(b) a duly executed (i) Syndicated Loan Note and
(ii) Money Market Loan Note for the account of each Bank
complying with the provisions of Section 2.03;
(c) an opinion letter (together with any opinions of
local counsel relied on therein) of Akin, Gump, Strauss,
Hauer & Feld, L.L.P., counsel for the Borrower, dated as of
the Closing Date, substantially in the form of Exhibit B and
covering such additional matters relating to the
transactions contemplated hereby as the Administrative Agent
or any Bank may reasonably request;
(d) an opinion of Jones, Day, Reavis & Pogue, special
counsel for the Administrative Agent, dated as of the
Closing Date, substantially in the form of Exhibit C and
covering such additional matters relating to the
transactions contemplated hereby as the Administrative Agent
or any Bank may reasonably request;
(e) a certificate (the "Closing Certificate")
substantially in the form of Exhibit F), dated as of the
Closing Date, signed by a principal financial officer of the
Borrower, to the effect that (i) no Default has occurred and
is continuing on the Closing Date, and (ii) the
representations and warranties of the Borrower contained in
Article IV are true on and as of the Closing Date;
(f) a termination letter pertaining to the
cancellation by the Borrower of all of the Commitments under
that certain Credit Agreement, dated June 4, 1993, among the
Borrower, the Banks party thereto, and Wachovia Bank of
North Carolina, N.A., as agent;
(g) all documents which the Administrative Agent or
any Bank may reasonably request relating to the existence of
the Borrower, the corporate authority for and the validity
of this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance reasonably
satisfactory to the Administrative Agent, including, without
limitation, a certificate of incumbency of the Borrower,
signed by the Secretary or an Assistant Secretary of the
Borrower, certifying as to the names, true signatures and
incumbency of the officer or officers of the Borrower
authorized to execute and deliver the Loan Documents, and
certified copies of the following items: (i) the Borrower's
Certificate of Incorporation, (ii) the Borrower's Bylaws,
(iii) a certificate of the Secretary of State of the State
of North Carolina as to the good standing of the Borrower as
a North Carolina corporation, and (iv) the action taken by
the Board of Directors of the Borrower authorizing the
Borrower's execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which
the Borrower is a party; and
(h) a Notice of Borrowing.
SECTION 3.02. Conditions to All Borrowings. The
obligation of each Bank to make a Syndicated Loan not
representing a refinancing of an outstanding Borrowing by means
of a Base Rate Borrowing on the occasion of each Syndicated
Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Administrative Agent of a Notice of
Borrowing;
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties
of the Borrower contained in Article IV of this Agreement
shall be true on and as of the date of such Borrowing (other
than representations and warranties which specifically
relate to an earlier date); and
(d) the fact that, immediately after such Syndicated
Borrowing, the aggregate outstanding principal amount of the
Syndicated Loans of each Bank will not exceed the amount of
its Commitment.
Each Borrowing (both Syndicated and Money Market) hereunder shall
be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing as to the truth and accuracy of the
facts specified in paragraphs (b), (c) and (d) of this Section;
provided that such Borrowing shall not be deemed to be such a
representation and warranty to the effect set forth in Section
4.04(b).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such
qualification is necessary and where the failure to so qualify
will not have or will not reasonably be expected to have a
Material Adverse Effect, and has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the other Loan
Documents (i) are within the Borrower's corporate powers, (ii)
have been duly authorized by all necessary corporate action,
(iii) require no action by or in respect of or filing with, any
governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of
the Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of
its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
enforceable in accordance with its terms, and the Notes and the
other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with their
respective terms, provided that the enforceability hereof and
thereof is subject in each case to general principles of equity
and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of January 1, 1994 and the related consolidated
statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, reported on by Coopers & Lybrand, copies
of which have been delivered to each of the Banks, and the
unaudited consolidated financial statements of the Borrower for
the interim period ended September 10, 1994, copies of which have
been delivered to each of the Banks, fairly present, in
conformity with GAAP, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such
periods stated.
(b) Since January 1, 1994, there has been no event,
act, condition or occurrence having a Material Adverse Effect,
except for any store closings that are part of the Borrower's
business and financing plans for Fiscal Year 1994 described in
the Borrower's 8-K dated January 7, 1994.
SECTION 4.05. No Litigation. There is no action, suit
or proceeding pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental
body, agency or official which creates a reasonable possibility
of having or causing a Material Adverse Effect or which in any
manner draws into question the validity of or creates a
reasonable possibility of impairing the ability of the Borrower
to perform its obligations under, this Agreement, the Notes or
any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower
and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of
ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the
Controlled Group has incurred any withdrawal liability with
respect to any Multiemployer Plan under Title IV of ERISA, and no
such liability is expected to be incurred.
SECTION 4.07. Compliance with Laws; Taxes. The
Borrower and its Subsidiaries are in compliance in all material
respects with all applicable laws, regulations and similar
requirements of governmental authorities, except where such
compliance is being contested in good faith through appropriate
proceedings. There have been filed on behalf of the Borrower and
its Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by
them and all taxes due pursuant to such returns or pursuant to
any assessment received by or on behalf of the Borrower or any
Subsidiary have been paid, unless the terms of Section 5.10(a)
permit non-payment. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of taxes or
other governmental charges are, in the opinion of the Borrower,
adequate. As of the Closing Date, United States income tax
returns of the Borrower and its Subsidiaries' have been examined
and closed through the Fiscal Year ended December 29, 1990.
SECTION 4.08. Subsidiaries. Each of the Borrower's
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such
qualification is necessary except where the failure to so qualify
will not have and will not reasonably be expected to have a
Material Adverse Effect, and has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
The Borrower has no Subsidiaries except for those Subsidiaries
listed on Schedule 4.08 (as such Schedule may be supplemented
from time to time by the Borrower), which accurately sets forth
each such Subsidiary's complete name and jurisdiction of
incorporation.
SECTION 4.09. Not an Investment Company. Neither the
Borrower nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
SECTION 4.10. Ownership of Property; Liens. Each of
the Borrower and its Consolidated Subsidiaries has title to its
properties sufficient for the conduct of its business, and none
of such property is subject to any Lien except as permitted in
Section 5.05.
SECTION 4.11. No Default. Neither the Borrower nor any
of its Consolidated Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it
is a party or by which it or any of its property is bound which
could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All information
heretofore furnished by the Borrower to the Administrative Agent
or any Bank for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the
Administrative Agent or any Bank will be, true, accurate and
complete in every material respect or based on reasonable
estimates on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing
any and all facts which will have or cause, or will be reasonably
likely to have or cause, a Material Adverse Effect.
SECTION 4.13. Environmental Matters. (a) Neither the
Borrower nor any Subsidiary is subject to any Environmental
Liability which could have or cause a Material Adverse Effect and
neither the Borrower nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state
statute similar to CERCLA, with respect to any matter or matters
which, individually, or in the aggregate, could have or cause a
Material Adverse Effect. None of the Properties has been
identified on any current or proposed (i) National Priorities
List under 40 C.F.R. 300, (ii) CERCLIS list or (iii) any list
arising from a state statute similar to CERCLA, relating to any
matter or matters which, individually or in the aggregate, could
have or cause a Material Adverse Effect.
(b) No Hazardous Materials have been or are being
used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled at,
or shipped or transported to or from the Properties or are
otherwise present at, on, in or under the Properties, or, to the
best of the knowledge of the Borrower, at or from any adjacent
site or facility, except for Hazardous Materials, such as
cleaning solvents, pesticides, petroleum and chemical-based
consumer products, and other materials used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in commercially
reasonable amounts in the ordinary course of business in
compliance with all applicable Environmental Requirements, and
such other Hazardous Materials the unlawful discharge of which
could not have or cause a Material Adverse Effect.
(c) The Borrower and each of its Subsidiaries has
procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all
Environmental Requirements in connection with the operation of
the Properties and the Borrower's and each of its Subsidiary's
respective businesses, except where the failure to comply could
not have or cause a Material Adverse Effect.
SECTION 4.14. Capital Stock. All Capital Stock,
debentures, bonds, notes and all other securities of the Borrower
and its Subsidiaries presently issued and outstanding are validly
and properly issued in accordance with all applicable laws,
including but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued
shares of Capital Stock of the Borrower's Wholly Owned
Subsidiaries is owned by the Borrower free and clear of any Lien
or adverse claim. At least a majority of the issued shares of
capital stock of each of the Borrower's other Subsidiaries (other
than Wholly Owned Subsidiaries) is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of any Loan will be
used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
SECTION 4.16. Insolvency. After giving effect to the
execution and delivery of the Loan Documents and the making of
the Loans under this Agreement, the Borrower will not be
"insolvent," within the meaning of such term as used in N.C. GEN.
STAT. 23-3, as amended from time to time, or as defined in
101 of Title 11 of the United States Code, as amended from time
to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in
any business or transaction, whether current or contemplated.
SECTION 4.17. Insurance. The Borrower maintains, with
financially sound and reputable insurance companies, insurance
(including appropriate self-insurance) on all of its property in
at least such amounts (with such deductibles and retentions) and
at least against such risks as are usually insured against in the
same general area by companies of established repute engaged in
the same or similar business and owning similar assets in the
same general areas as the Borrower.
SECTION 4.18. Public Utility Holding Company Act.
Neither the Borrower nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable hereunder or under any
Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within 100
days after the end of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders'
equity and cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous
fiscal year, all certified by Coopers & Lybrand or other
independent public accountants of nationally recognized
standing, with such certification to be free of exceptions
and qualifications not reasonably acceptable to the Required
Banks;
(b) as soon as available and in any event within 60
days after the end of each Fiscal Quarter, a consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related
statement of income and statement of cash flows for such
quarter and for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding Fiscal
Quarter and the corresponding portion of the previous Fiscal
Year, all certified (subject to normal year-end adjustments)
as to fairness of presentation, GAAP and consistency by the
chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of
annual financial statements referred to in paragraph (a)
above, a statement of the firm of independent public
accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to
believe that any Default existed on the date of such
financial statements or if any such Default has come to
their attention, specifying the nature and period of
existence thereof, provided that such accountants shall not
be liable by reason of any failure to obtain knowledge of
any such Default in the course of their examination;
(d) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b)
above, a certificate, substantially in the form of Exhibit G
(a "Compliance Certificate"), of the chief financial
officer, the chief accounting officer or the treasurer of
the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was
in compliance with the requirements of Sections 5.03 through
5.05, inclusive, Section 5.08, and Sections 5.17, 5.18 and
5.20, on the date of such financial statements and (ii)
stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth
the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(e) within 5 Domestic Business Days after the Borrower
becomes aware of the occurrence of any Default, a
certificate of the chief financial officer, the chief
accounting officer or the treasurer of the Borrower setting
forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent)
and annual, quarterly or monthly reports which the Borrower
shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to
be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy
of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a
trustee to administer any Plan, a copy of such notice;
(i) contemporaneously with the mailing thereof, copies
of all notices delivered by the Borrower under the Senior
Note Agreement; and
(j) from time to time such additional information
regarding the financial position or business of the Borrower
and its Subsidiaries as the Administrative Agent, at the
request of any Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and
Records. The Borrower will (i) keep, and cause each Subsidiary
to keep, proper books of record and account in which full, true
and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and
activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the
occurrence of a Default and at the Borrower's reasonable expense
after the occurrence of a Default to visit and inspect any of
their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and
inspections, in each case upon reasonable notice at such
reasonable times and as often as may reasonably be requested.
SECTION 5.03. Loans or Advances. Neither the Borrower
nor any of its Subsidiaries shall make loans or advances to any
Person except as permitted by Section 5.04 and except: (i) loans
or advances to employees not exceeding $10,000,000 in the
aggregate principal amount outstanding at any time, in each case
made in the ordinary course of business and consistent with
practices existing on the Closing Date, (ii) deposits required by
government agencies or public utilities and (iii) loans or
advances to Wholly Owned Subsidiaries of the Borrower; provided
that after giving effect to the making of any loans, advances or
deposits permitted by this Section, the Borrower will be in full
compliance with all the provisions of this Agreement.
SECTION 5.04. Investments. Neither the Borrower nor
any of its Subsidiaries shall make Investments in any Person
except as permitted by Section 5.03 and except Investments in (i)
direct obligations of the United States Government (or
obligations guaranteed by the United States Government or any
agency thereof) maturing within one year, (ii) time deposits,
bank accounts, certificates of deposit issued by a commercial
bank whose credit is reasonably satisfactory to the
Administrative Agent, provided, that, any such commercial bank
shall be acceptable so long as either (w) the Borrower shall have
given the Agent written notice of the Borrower's intention to
make investments in such Bank from time to time and the Agent
shall not have delivered written notice to the Borrower of its
dissatisfaction with any such Bank within 10 Business Days
following the Agent's receipt of notice from the Borrower, (x) in
the case of bank accounts, the daily average collected balances
do not exceed $1,000,000 or (y) in all other cases referred to in
this clause (ii), the aggregate obligations owing by such
commercial bank to the Borrower do not exceed $1,000,000 at any
time, (iii) commercial paper rated A1 or the equivalent thereof
by Standard & Poor's or P1 or the equivalent thereof by Moody's
and in either case maturing within one year after the date of
acquisition, (iv) tender bonds the payment of the principal of
and interest on which is fully supported by a letter of credit
issued by a United States financial institution whose long-term
certificates of deposit are rated at least AA or the equivalent
thereof by Standard & Poor's and Aa2 or the equivalent thereof by
Moody's, (v) euro-dollar deposits in financial institutions whose
credit quality is satisfactory to the Administrative Agent,
(vi) prepaid expenses, and similar items arising in the ordinary
course of business, (vii) stock, obligations or other securities
received in settlement of debts owing to the Borrower or its
Subsidiaries or as a result of a bankruptcy or insolvency
proceedings or upon the foreclosure, perfection or enforcement of
any lien in favor of the Borrower or its Subsidiaries, in each
case as to debt arising in the ordinary course of business of the
Borrower or such Subsidiary, (viii) Subsidiaries of the Borrower,
(ix) Repurchase Obligations with a term of seven days for
underlying securities of the types described in clause (i) above
with financial institutions meeting the qualifications in clause
(iv) above; (x) Investments in money market funds substantially
all of whose assets comprise securities of the types described in
clauses (i), (ii), (iii), and (iv) (without any requirement for
approval by the Administrative Agent), (xi) Persons in connection
with the acquisition, construction and ownership of stores and/or
shopping centers in which stores owned or operated by the
Borrower are located, provided that such investments shall not in
the aggregate exceed at any time $25,000,000.00 and/or (xii)
other Investments (not described in clauses (i) through (xi)
above) which do not in the aggregate at any time exceed $100,000.
SECTION 5.05. Negative Pledge. Neither the Borrower
nor any Consolidated Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this Agreement in
an aggregate principal amount not exceeding $10,000,000;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt (including,
without limitation, a Capitalized Lease) incurred or assumed
for the purpose of financing all or any part of the cost of
acquiring or constructing such asset, provided that such
Lien attaches to such asset concurrently with or within 18
months after the acquisition or completion of construction
thereof or such Lien attaches as a result of an existing
lease being re-characterized under GAAP as a Capital Lease;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged or consolidated with
or into the Borrower or a Consolidated Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any
Lien permitted by any of the foregoing paragraphs of this
Section, provided that (i) such Debt is not secured by any
additional assets, and (ii) the amount of such Debt secured
by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets which (i) do not secure Debt and
(ii) do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof in
the operation of its business; and
(i) any Lien on Margin Stock.
Provided, that at no time shall the aggregate Debt of the
Borrower secured by Liens (other than a Lien securing lease
obligations under a Capitalized Lease) exceed an amount equal to
20.0% of Consolidated Tangible Net Worth. For purposes of
determining compliance with this Section, Consolidated Tangible
Net Worth shall be determined by reference to the Borrower's most
recent audited financial statements provided to the
Administrative Agent and the Banks pursuant to Section 5.01(a).
SECTION 5.06. Maintenance of Existence. The Borrower
shall, and shall cause each Subsidiary to, maintain its corporate
existence (subject to transactions permitted by Section 5.08) and
carry on its business in substantially the same manner and in
substantially the same fields (allowing for reasonable and
logical extensions thereof) as such business is now carried on
and maintained.
SECTION 5.07. Dissolution. Neither the Borrower nor
any of its Subsidiaries shall suffer or permit dissolution or
liquidation either in whole or in part or, at any time when a
Default shall be in existence or be caused thereby, redeem or
retire any shares of its own stock or that of any Subsidiary,
except through corporate reorganization to the extent permitted
by Section 5.08.
SECTION 5.08. Consolidations, Mergers and Sales of
Assets. The Borrower will not, nor will it permit any Subsidiary
to, consolidate or merge with or into, or sell, lease or
otherwise transfer all or any substantial part of its assets to,
any other Person (excluding sales of assets in the ordinary
course of business), or discontinue or eliminate any business
line or segment, provided that (a) the Borrower may merge with
another Person if (i) such Person was organized under the laws of
the United States of America or one of its states, (ii) the
Borrower is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall
have occurred and be continuing, (b) Wholly Owned Subsidiaries of
the Borrower may merge with one another, (c) the Borrower and its
Wholly Owned Subsidiaries may transfer assets among each other in
the exercise of their reasonable business judgment, and (d) the
foregoing limitation on the sale, lease or other transfer of
assets and on the discontinuation or elimination of a business
line or segment shall not prohibit a transfer of assets or the
discontinuance or elimination of a business line or segment (in a
single transaction or in a series of related transactions) unless
the aggregate assets to be so transferred or utilized in a
business line or segment to be so discontinued, when combined
with all other assets transferred (including, without limitation,
pursuant to a sale and leaseback transaction), and all other
assets utilized in all other business lines or segments
discontinued, during the period from the Closing Date through and
including the date of any such relevant sale or disposition would
exceed 20.0% of Consolidated Total Assets in any consecutive 36
month period; provided, that if, within 90 days of the sale of
any assets, the Borrower acquires similar assets having a use
similar to and a fair market value at least equal to the assets
so sold, then the value of the assets sold shall not be included
in calculating future assets permitted to be sold under this
Section 5.10. For purposes of determining compliance with this
Section, Consolidated Total Assets shall be determined by
reference to the Borrower's most recently audited financial
statements provided to the Administrative Agent and the Banks
pursuant to Section 5.01(a).
SECTION 5.09. Use of Proceeds. The proceeds of the
Loans shall be used by the Borrower for general corporate
purposes. No portion of the proceeds of the Loans will be used
by the Borrower or any Subsidiary (i) in connection with, whether
directly or indirectly, any tender offer for, or other
acquisition of, stock of any corporation with a view towards
obtaining control of such other corporation unless such tender
offer for or other acquisition is to be made on a negotiated
basis with the approval of the Board of Directors of the Person
to be acquired, (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, or (iii) for any purpose in violation
of any applicable law or regulation.
SECTION 5.10. Compliance with Laws; Payment of Taxes.
(a) The Borrower will, and will cause each of its Subsidiaries
and each member of the Controlled Group to, comply in all
material respects with applicable laws (including but not limited
to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith
through appropriate proceedings. The Borrower will, and will
cause each of its Subsidiaries to, promptly pay before the same
shall become past due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of the
Borrower or any Subsidiary, except liabilities being contested in
good faith and against which, if requested by the Administrative
Agent, the Borrower will set up reserves in accordance with GAAP.
(b) The Borrower shall not permit the aggregate
complete or partial withdrawal liability under Title IV of ERISA
with respect to Multiemployer Plans incurred by the Borrower and
members of the Controlled Group to exceed $1,000,000 at any time.
For purposes of this Section 5.10(b), the amount of withdrawal
liability of the Borrower and members of the Controlled Group at
any date shall be the aggregate present value of the amount
claimed to have been incurred less any portion thereof which the
Borrower and members of the Controlled Group have paid or as to
which the Borrower reasonably believes, after appropriate
consideration of possible adjustments arising under Sections 4219
and 4221 of ERISA, it and members of the Controlled Group will
have no liability, provided that the Borrower shall obtain prompt
written advice from independent actuarial consultants supporting
such determination.
SECTION 5.11. Insurance. The Borrower will maintain,
and will cause each of its Subsidiaries to maintain (either in
the name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance
(including appropriate self-insurance) on all its property in at
least such amounts (with such deductions and retentions) and
against at least such risks as are usually insured against in the
same general area by companies of established repute engaged in
the same or similar business and owning similar assets in the
same general areas as the Borrower and its Subsidiaries.
SECTION 5.12. Change in Fiscal Year. The Borrower will
not change its Fiscal Year without the consent of the Required
Banks.
SECTION 5.13. Maintenance of Property. The Borrower
shall, and shall cause each Subsidiary to, maintain all of its
properties and assets, taken as a whole, in reasonably good
condition, repair and working order, ordinary wear and tear
excepted.
SECTION 5.14. Environmental Notices. Within 10
Domestic Business Days after the Borrower becomes aware thereof,
the Borrower shall furnish to the Banks and the Administrative
Agent written notice of all Environmental Liabilities, pending,
threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting
the Properties or any adjacent property, and all facts, events,
or conditions that could lead to any of the foregoing; provided,
however, that no such notice shall be required if (x) the amount
involved or asserted does not exceed $200,000 and (y) no serious
disruption of the use or operation of the relevant Property is
reasonably anticipated.
SECTION 5.15. Environmental Matters. The Borrower will
not, and will not permit any Third Party (to the extent that the
Borrower has the ability to control the actions or inactions of
such Third Party) to, use, produce, manufacture, process, treat,
recycle, generate, store, dispose of, manage at, or otherwise
handle, or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials such as
cleaning solvents, pesticides, petroleum and chemical based
consumer products, and other similar materials used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed, managed, or otherwise handled in commercially
reasonable amounts in the ordinary course of business in
compliance with all applicable Environmental Requirements, and
such other Hazardous Materials the unlawful discharge of which
could not have or cause a Material Adverse Effect.
SECTION 5.16. Environmental Release. The Borrower
agrees that upon the occurrence of an Environmental Release it
will act immediately to investigate the extent of, and to take
appropriate remedial action to eliminate, such Environmental
Release, whether or not ordered or otherwise directed to do so by
any Environmental Authority.
SECTION 5.17. Fixed Charges Coverage. At the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending
December 31, 1994, the ratio of Cash Available for Fixed Charges
for the immediately preceding 4 Fiscal Quarters then ended to
Consolidated Fixed Charges for the immediately preceding 4 Fiscal
Quarters then ended, shall not have been less than 2.25 to 1.00.
SECTION 5.18. Ratio of Consolidated Debt to
Consolidated Total Capitalization. The ratio of Consolidated
Debt to Consolidated Total Capitalization shall not at any time
exceed 0.60 to 1.00.
SECTION 5.19. Prepayment of Senior Note Agreement.
Within 3 months following the Closing Date, the Borrower shall
permanently repay all of its obligations under the Senior Note
Agreement.
SECTION 5.20. Debt of Subsidiaries. The Borrower shall
not permit any Subsidiary to incur any Debt except for (i) Debt
owing to the Borrower, (ii) Debt of a Subsidiary which is a
Subsidiary Guarantor, and (iii) other Debt which shall not exceed
in the aggregate $20,000,000.00.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
(a) the Borrower shall fail to pay (i) when due, any
principal hereunder or (ii) within 5 days of the date when
due, any interest or fees hereunder; or
(b) there shall be any failure to observe or perform
any covenant contained in (i) Sections 5.01 (other than
clauses (f), (g) and (h) thereof), 5.02(ii), 5.03 to 5.10,
inclusive, 5.12, or 5.17 through 5.19, inclusive; provided,
that, with respect to any failure under Section 5.10, if
such failure could not have or cause a Material Adverse
Effect, then no Event of Default will arise hereunder unless
such failure shall not have been cured within 30 days after
the earlier to occur of (x) written notice thereof has been
given to the Borrower by the Administrative Agent at the
request of any Bank or (y) the Borrower otherwise becomes
aware of any such failure or (ii) Section 5.01(f), (g), or
(h) and such failure shall continue to exist for a period of
10 days following the earlier to occur of (x) written notice
thereof has been given to the Borrower by the Administrative
Agent at the request of any Bank or (y) the Borrower
otherwise becomes aware of any such failure; or
(c) there shall be any failure to observe or perform
any covenant or agreement contained or incorporated by
reference in this Agreement (other than those covered by
paragraph (a) or (b) above) and such failure shall not have
been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to the Borrower by the
Administrative Agent at the request of any Bank or (ii) the
Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made by the Borrower in Article IV of this
Agreement, or by any Subsidiary Guarantor in any Subsidiary
Guaranty, or in any certificate, financial statement or
other document delivered pursuant to this Agreement or any
Subsidiary Guaranty shall prove to have been incorrect or
misleading in any material respect when made (or deemed
made); or
(e) the Borrower or any Subsidiary shall fail to make
any payment in respect of Debt having an outstanding
aggregate principal amount equal to or exceeding
$20,000,000.00 (other than the Notes) when due or within any
applicable grace period; or
(f) any event or condition shall occur which results in
the acceleration of the maturity of Debt outstanding in an
aggregate principal amount equal to or exceeding
$20,000,000.00 of the Borrower or any Subsidiary (including,
without limitation, any required mandatory prepayment or
"put" of such Debt to the Borrower or any Subsidiary) or
enables (or, with the giving of notice or lapse of time or
both, would enable) the holders of such Debt or the
commitment relating to such Debt or any Person acting on
such holders' behalf to accelerate the maturity thereof or
terminate any such commitment (including, without
limitation, any required mandatory prepayment or "put" of
such Debt to the Borrower or any Subsidiary); or
(g) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the
Borrower or any Subsidiary under the federal bankruptcy laws
as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it
shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to
enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating
that any such Plan or Plans must be terminated; or
(j) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $10,000,000.00
shall be rendered against the Borrower or any Subsidiary and
such judgment or order shall continue unsatisfied, unbonded,
unvacated or unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the
Borrower under Section 6323 of the Code or a lien of the
PBGC shall be filed against the Borrower under Section 4068
of ERISA and in either case such lien shall remain
undischarged for a period of 25 days after the date of
filing; or
(l) (i) any Person (other than Delhaize or Detla) or
two or more Persons acting in concert (other than Delhaize
and Detla acting pursuant to the Shareholder Agreement)
shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 30% or more of
the outstanding shares of the voting stock of the Borrower;
or (ii) as of any date a majority of the Board of Directors
of the Borrower consists of individuals who were not either
(A) directors of the Borrower as of the corresponding date
of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Borrower of which
a majority consisted of individuals described in clause (A),
or (C) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A) and
individuals described in clause (B);
then, and in every such event, (i) the Administrative Agent
shall, if requested by the Required Banks, by notice to the
Borrower terminate the Commitments and they shall thereupon
terminate, (ii) any Bank may terminate its obligation to fund a
Money Market Loan in connection with any relevant Money Market
Quote, and (iii) the Administrative Agent shall, if requested by
the Required Banks, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower together with interest at
the Default Rate accruing on the principal amount thereof from
and after the date of such Event of Default; provided that if any
Event of Default specified in paragraph (g) or (h) above occurs
with respect to the Borrower, without any notice to the Borrower
or any other act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together
with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower
together with interest thereon at the Default Rate accruing on
the principal amount thereof from and after the date of such
Event of Default. Notwithstanding the foregoing, the
Administrative Agent shall have available to it all other
remedies at law or equity, and shall exercise any one or all of
them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Administrative
Agent shall give notice to the Borrower of any Default under
either Section 6.01(b) or Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment; Powers and Immunities. Each
Bank hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically
delegated to the Administrative Agent by the terms hereof and
thereof, together with such other powers as are reasonably
incidental thereto. Neither the Administrative Agent nor the Co-
Agents: (a) shall have any duties or responsibilities except as
expressly set forth in this Agreement and the other Loan
Documents, and shall not by reason of this Agreement or any other
Loan Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or any
other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under,
this Agreement or any other Loan Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure
by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other
Loan Document except to the extent requested by the Required
Banks, and then only on terms and conditions satisfactory to the
Administrative Agent, and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any
other Loan Document or any other document or instrument referred
to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or wilful
misconduct. Each of the Administrative Agent and the Co-Agents
may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. The
provisions of this Article VII are solely for the benefit of the
Administrative Agent, the Co-Agents and the Banks, and the
Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and
duties under this Agreement and under the other Loan Documents,
each of the Administrative Agent and the Co-Agents shall act
solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any relationship of agency or trust with
or for the Borrower. The Co-Agents shall have no duties or
responsibilities whatsoever in connection with this Agreement.
The duties of the Administrative Agent shall be ministerial and
administrative in nature, and the Administrative Agent shall not
have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank.
SECTION 7.02. Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely upon any
certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it
to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants or other
experts selected by the Administrative Agent. As to any matters
not expressly provided for by this Agreement or any other Loan
Document, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action
taken or failure to act pursuant thereto shall be binding on all
of the Banks.
SECTION 7.03. Defaults. The Administrative Agent shall
not be deemed to have knowledge of the occurrence of a Default or
an Event of Default (other than the nonpayment of principal of or
interest on the Loans) unless the Administrative Agent has
received notice from a Bank or the Borrower specifying such
Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of a Default or an Event
of Default, the Administrative Agent shall give prompt notice
thereof to the Banks. The Administrative Agent shall give each
Bank prompt notice of each nonpayment of principal of or interest
on the Loans whether or not it has received any notice of the
occurrence of such nonpayment. The Administrative Agent shall
(subject to Section 9.06) take such action hereunder with respect
to such Default or Event of Default as shall be directed by the
Required Banks provided that, unless and until the Administrative
Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests
of the Banks.
SECTION 7.04. Rights of Administrative Agent as a Bank.
With respect to the Loans made by it, each of the Administrative
Agent and each of the Co-Agents in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not the
Administrative Agent or a Co-Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include
each of Wachovia and NationsBank of North Carolina, N.A. in its
individual capacity. Each of the Administrative Agent and the Co-
Agents may (without having to account therefor to any Bank)
accept deposits from, lend money to and generally engage in any
other business with the Borrower (and any of its Affiliates) as
if it were not acting as the Administrative Agent or a Co-Agent,
and each of the Administrative Agent and the Co-Agents may accept
fees and other consideration from the Borrower (in addition to
any agency fees and arrangement fees heretofore agreed to between
the Borrower and the Administrative Agent) for services in
connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally
agrees to indemnify the Administrative Agent and the Co-Agents,
to the extent that the Administrative Agent and/or the Co-Agents
shall not have been reimbursed by the Borrower, ratably in
accordance with its Commitment, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, counsel
fees and disbursements) or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent and/or the Co-Agents in any way
relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and
is continuing, the normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or thereof or any such
other documents; provided, however that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of the Administrative Agent
and/or the Co-Agents. If any indemnity furnished to the
Administrative Agent and/or the Co-Agents for any purpose shall,
in the opinion of the Administrative Agent and/or the Co-Agents,
be insufficient or become impaired, the Administrative Agent
and/or the Co-Agents may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such
additional indemnity is furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES. NEITHER THE
ADMINISTRATIVE AGENT NOR THE CO-AGENTS SHALL BE RESPONSIBLE OR
LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner. The
Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have
been filed with the Administrative Agent and the provisions of
Section 9.08(c) have been satisfied. Any requests, authority or
consent of any Person who at the time of making such request or
giving such authority or consent is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange
therefor or replacement thereof.
SECTION 7.08. Nonreliance on the Administrative Agent,
the Co-Agents and Other Banks. Each Bank agrees that it has,
independently and without reliance on the Administrative Agent,
the Co-Agents or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance
upon the Administrative Agent, the Co-Agents or any other Bank,
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. The Administrative Agent shall
not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement or any of the other
Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the
Borrower or any other Person. Except for notices, reports and
other documents and information expressly required to be
furnished to the Banks by the Administrative Agent hereunder (the
Co-Agents having no such responsibility whatsoever hereunder) or
under the other Loan Documents, the Administrative Agent shall
not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial
condition or business of the Borrower or any other Person (or any
of their Affiliates) which may come into the possession of the
Administrative Agent.
SECTION 7.09. Failure to Act. Except for action
expressly required of the Administrative Agent hereunder or under
the other Loan Documents, the Administrative Agent shall in all
cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its
satisfaction by the Banks of their indemnification obligations
under Section 7.05 against any and all liability and expense
which may be incurred by the Administrative Agent by reason of
taking, continuing to take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Administrative
Agent and Co-Agents. Subject to the appointment and acceptance
of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice
thereof to the Banks and the Borrower and the Administrative
Agent may be removed at any time with or without cause by the
Required Banks. Upon any such resignation or removal, the
Required Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Required Banks and shall have
accepted such appointment within 30 days after the retiring
Administrative Agent's notice of resignation or the Required
Banks' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent. Any successor
Administrative Agent shall be a bank which has a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VII shall
continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder. The Co-Agents (or either of
them) may resign at any time upon 1 Domestic Business Day's
notice to the Administrative Agent and no successor therefor need
be appointed by the Required Banks (due to the fact that the Co-
Agents shall have no duties or responsibilities whatsoever
hereunder).
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(a) the Administrative Agent determines that deposits
in Dollars (in the applicable amounts) are not being offered
in the relevant market for such Interest Period, or
(b) the Required Banks advise the Administrative Agent
that the London Interbank Offered Rate as determined by the
Administrative Agent will not adequately and fairly reflect
the cost to such Banks of funding the relevant Euro-Dollar
Loan for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to
such suspension no longer exist, the obligations of the Banks to
make Euro-Dollar Loans shall be suspended. Unless the Borrower
notifies the Administrative Agent at least 2 Domestic Business
Days before the date of any Borrowing of such Euro-Dollar Loans
for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead
be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. (i) If, after the date
hereof, the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof (any such agency being referred to as an
"Authority" and any such event being referred to as a "Change of
Law"), or compliance by any Bank (or its Lending Office) with any
request or directive (whether or not having the force of law) of
any Authority shall make it unlawful or impossible for any Bank
(or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Administrative Agent in
writing, the Administrative Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such
Bank notifies the Borrower in writing and the Administrative
Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall
designate a different Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.
If such Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to
maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount
of each Euro-Dollar Loan of such Bank, together with accrued
interest thereon. Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in
an equal principal amount from such Bank (on which interest and
principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make
such a Base Rate Loan.
(ii) If at any time after a Bank gives notice under
Section 8.02(i), such Bank determines that it may lawfully make
Euro-Dollar Loans, such Bank shall promptly give notice of that
determination, in writing, to the Borrower and the Administrative
Agent, and the Administrative Agent shall promptly transmit the
notice to each other Bank. The Borrower's right to Euro-Dollar
Loans shall thereupon be restored.
SECTION 8.03. Increased Cost and Reduced Return. (a)
If after the date hereof, a Change of Law or compliance by any
Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority:
(i) shall subject any Bank (or its Lending Office) to
any tax, duty or other charge with respect to its
Euro-Dollar Loans, its Notes or its obligation to make
Euro-Dollar Loans, or shall change the basis of taxation of
payments to any Bank (or its Lending Office) of the
principal of or interest on its Euro-Dollar Loans or any
other amounts due under this Agreement in respect of its
Euro-Dollar Loans or its obligation to make Euro-Dollar
Loans (except for taxes imposed or measured by net income,
taxes on capital, profits, or franchise taxes of such Bank
or its Lending Office for such Loans imposed by the
jurisdiction in which such Bank's principal executive office
or Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits
with or for the account of, or credit extended by, any Bank
(or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office)
or on the London interbank market any other condition
affecting its Euro-Dollar Loans, its Notes or its obligation
to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Euro-Dollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Administrative Agent),
the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof, or
compliance (regardless of whether such compliance is required as
of the date hereof) by any Bank (or its Lending Office) with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after
demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such reduction.
(c) Each Bank will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate a
different Lending Office or take other reasonably available
measures if such designation or other measures will avoid the
need for, or reduce the amount of, such compensation and will
not, in the judgment of such Bank, be otherwise disadvantageous
to such Bank. A certificate of any Bank claiming compensation
under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall include a brief summary
of the basis for such claim and shall constitute rebuttable
presumptive evidence of the amount of compensation owing to any
relevant Bank. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be
applicable with respect to any Participant, Assignee or other
Transferee, and any calculations required by such provisions
shall be made based upon the circumstances of such Participant,
Assignee or other Transferee.
SECTION 8.04. Base Rate Loans Substituted for
Euro-Dollar Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section
8.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank through the Administrative Agent,
have elected that the provisions of this Section shall apply to
such Bank, then, unless and until such Bank notifies the Borrower
that the circumstances giving rise to such suspension or demand
for compensation no longer apply:
(a) all Loans which would otherwise be made by such
Bank as Euro-Dollar Loans shall be made instead as Base Rate
Loans, (in all cases interest and principal on such Loans
shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been
repaid, all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to
repay its Base Rate Loans instead.
SECTION 8.05. Compensation. Upon the request of any
Bank, delivered to the Borrower and the Administrative Agent, the
Borrower shall pay to such Bank such amount or amounts as shall
compensate such Bank for any loss, cost or expense incurred by
such Bank (after taking into account any reasonably available
measures to mitigate such loss, cost or expense) as a result of:
(a) any payment or prepayment (pursuant to Section
2.10, 2.11, 6.02, 8.02 or otherwise) of (i) a Euro-Dollar Loan or
(ii) a Money Market Loan, on a date other than the last day of an
Interest Period for any relevant Euro-Dollar Loan or the Stated
Maturity Date for any relevant Money Market Loan; or
(b) any failure by the Borrower to prepay a
Euro-Dollar Loan on the date for such prepayment specified in the
relevant notice of prepayment hereunder; or
(c) any failure by the Borrower to borrow a
Euro-Dollar Loan on the date for the Euro-Dollar Borrowing of
which such Euro-Dollar Loan is a part specified in the applicable
Notice of Borrowing delivered pursuant to Section 2.02;
such compensation to include, without limitation, (i) in the case
of Euro-Dollar Loans, an amount equal to the excess, if any, of
(x) the amount of interest which would have accrued on the amount
so paid or prepaid or not prepaid or borrowed for the period from
the date of such payment, prepayment or failure to prepay or
borrow to the last day of the then current Interest Period for
such Euro-Dollar Loan (or, in the case of a failure to prepay or
borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow)
at the applicable rate of interest for such Euro-Dollar Loan
provided for herein over (y) the amount of interest (as
reasonably determined by such Bank) such Bank would have paid on
deposits in Dollars of comparable amounts having terms comparable
to such period placed with it by leading banks in the London
interbank market and (ii) in the case of Money Market Loans, an
amount equal to the interest that would have accrued on such Loan
from the date of prepayment through the Stated Maturity Date.
Should the Borrower make any payments to a Bank under this
Section 8.05 as a result of a failure by the Borrower to make a
Borrowing or the prepayment of a Euro-Dollar Loan, then, if the
Borrower shall immediately make a Base Rate Borrowing from such
Bank in at least the same amount as the Borrowing giving rise to
compensation hereunder, and such Base Rate Borrowing shall remain
outstanding for at least the term of the Interest Period of the
relevant Borrowing giving rise to such compensation, then such
Bank shall give the Borrower a credit against interest owing to
such Bank in respect of the Base Rate Borrowing to the extent
that such Bank has already received interest income on the
Borrowing for the relevant Interest Period by virtue of the
Borrower's compliance with this Section 8.05; provided, that, in
no event shall any Bank owe any additional monies to the Borrower
on or after that date which would have been the last day of the
Interest Period for the Euro-Dollar Borrowing giving rise to
compensation hereunder.
SECTION 8.06. Replacement of Banks. So long as no
Default shall be in existence or reasonably may be foreseen by
the Borrower (which conditions shall be evidenced by a
certificate of the Borrower to such effect delivered to the
Administrative Agent), the Borrower shall have the right, subject
to the terms and conditions set forth in Section 9.08(c), to
replace any Bank (a "Removed Bank") hereunder having made a claim
upon the Borrower to pay additional amounts pursuant to Sections
2.12, 8.02, 8.03, or 8.05, upon 30 days' prior written notice to
the Administrative Agent and the Removed Bank, by designating an
assignee for such Bank (a "Replacement Bank") to purchase the
Removed Bank's share of outstanding Loans and to assume the
Removed Bank's obligations to the Borrower under this Agreement;
provided, that, any Replacement Bank must be reasonably
acceptable to the Administrative Agent (and, in any event, may
not be an Affiliate of the Borrower) and such claim of the
Removed Bank for such additional amounts must be paid in full
through the date of assignment. Subject to the foregoing, the
Removed Bank agrees to assign (in the form of an Assignment and
Acceptance) without recourse to the Replacement Bank its share of
outstanding Commitments, and to delegate to the Replacement Bank
its obligations to the Borrower under this Agreement and its
future obligations to the Administrative Agent under this
Agreement. Upon such sale and delegation by the Removed Bank and
the purchase and assumption by the Replacement Bank, and
compliance with the provisions of Section 9.08(c), the Removed
Bank shall cease to be a "Bank" hereunder and the Replacement
Bank shall become a "Bank" under this Agreement; provided,
however, that any Removed Bank shall continue to be entitled to
the indemnification provisions contained elsewhere herein.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telecopier or similar writing) and shall be
given to such party at its address or telecopier number set forth
on the signature pages hereof or such other address or telecopier
number as such party may hereafter specify for the purpose by
notice to each other party. Each such notice, request or other
communication shall be effective (i) if given by telecopier, when
such telecopy is transmitted to the telecopier number specified
in this Section and the appropriate confirmation is received,
(ii) if given by mail, three Business Days after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Administrative Agent under Article
II or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the
Administrative Agent or any Bank in exercising any right, power
or privilege hereunder or under any Note or other Loan Document
shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The
Borrower shall pay (i) all out-of-pocket expenses of the
Administrative Agent, including fees and disbursements of special
counsel for the Banks and the Administrative Agent, in connection
with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any
amendment hereof or thereof or any Default or alleged Default
hereunder or thereunder and (ii) if a Default occurs, all
out-of-pocket expenses incurred by the Administrative Agent and
the Banks, including fees and disbursements of counsel, in
connection with such Default and collection and other enforcement
proceedings resulting therefrom, including out-of-pocket expenses
incurred in enforcing this Agreement and the other Loan
Documents. The Borrower shall indemnify the Administrative Agent
and each Bank against any transfer taxes, documentary taxes,
assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan
Documents.
SECTION 9.04. Indemnification. The Borrower shall
indemnify the Administrative Agent, the Co-Agents, the Banks, and
each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to
which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any
actual or proposed use by the Borrower of the proceeds of any
extension of credit by any Bank hereunder or breach by the
Borrower of this Agreement or any other Loan Document or from any
investigation, litigation (including, without limitation, any
actions taken by the Administrative Agent, the Co-Agents, or any
of the Banks to enforce this Agreement or any of the other Loan
Documents (except enforcement action on which the Borrower
prevails on the merits)) or other proceeding (including, without
limitation, any threatened investigation or proceeding) relating
to the foregoing, and the Borrower shall reimburse the
Administrative Agent, the Co-Agents, and each Bank, and each
Affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any reasonable expenses
(including, without limitation, legal fees) incurred in
connection with any such investigation or proceeding; but
excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or wilful
misconduct (including a violation of Section 9.09) of the Person
to be indemnified.
SECTION 9.05. Sharing of Setoffs. Each Bank agrees
that if it shall, by exercising any right of setoff or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest owing with respect to
the Notes held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of
all principal and interest owing with respect to the Notes held
by such other Bank, the Bank receiving such proportionately
greater payment shall purchase such participations in the Notes
held by the other Banks owing to such other Banks, and such other
adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held
by the Banks owing to such other Banks shall be shared by the
Banks pro rata; provided that (i) nothing in this Section shall
impair the right of any Bank to exercise any right of setoff or
counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other
than its indebtedness under the Notes, and (ii) if all or any
portion of such payment received by the purchasing Bank is
thereafter recovered from such purchasing Bank, such purchase
from each other Bank shall be rescinded and such other Bank shall
repay to the purchasing Bank the purchase price of such
participation to the extent of such recovery together with an
amount equal to such other Bank's ratable share (according to the
proportion of (x) the amount of such other Bank's required
repayment to (y) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable
by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of setoff or
counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Any
provision of this Agreement, the Syndicated Loan Notes or any
other Loan Documents may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of
the Administrative Agent are affected thereby, by the
Administrative Agent); provided that, no such amendment or waiver
shall, unless signed by all Banks, (i) change the Commitment of
any Bank or subject any Bank to any additional obligation, (ii)
change the principal of or rate of interest on any Loan or any
fees hereunder, (iii) change the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv)
change the amount of principal, interest or fees due on any date
fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the
Notes, or the percentage of Banks, which shall be required for
the Banks or any of them to take any action under this Section or
any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement or the
Notes, (vii) release or substitute all or any substantial part of
the collateral (if any) held as security for the Loans, (viii)
release any Guarantee given to support payment of the Loans or
(ix) amend this Section 9.06.
(b) Without having given the Administrative Agent
prior notice thereof, the Borrower will not solicit, request or
negotiate for or with respect to any proposed waiver or amendment
of any of the provisions of this Agreement unless each Bank shall
be informed thereof by the Borrower and shall be afforded an
opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver or consent effected pursuant to the
provisions of this Agreement shall be delivered by the Borrower
to each Bank forthwith following the date on which the same shall
have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, to any Bank (in its
capacity as such) as consideration for or as an inducement to the
entering into by such Bank of any waiver or amendment of any of
the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to
all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the
Banks represents to the Administrative Agent and each of the
other Banks that it in good faith is not, directly or indirectly
(by negative pledge or otherwise), relying upon any Margin Stock
as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns; provided that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement.
(b) Any Bank may at any time sell to one or more
Persons (each a "Participant") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any
Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank's obligations
under this Agreement shall remain unchanged, such Bank shall
remain solely responsible for the performance thereof, such Bank
shall remain the holder of any such Note for all purposes under
this Agreement, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. In no event shall a Bank that sells a participation
be obligated to the Participant to take or refrain from taking
any action hereunder except that such Bank may agree that it will
not (except as provided below), without the consent of the
Participant, agree to (i) the change of any date fixed for the
payment of principal of or interest on the related loan or loans,
(ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the
related loan or loans, (iii) the change of the principal of the
related loan or loans, (iv) any change in the rate at which
either interest is payable thereon or (if the Participant is
entitled to any part thereof) fees are payable hereunder from the
rate at which the Participant is entitled to receive interest or
fees (as the case may be) in respect of such participation, (v)
the release or substitution of all or any substantial part of the
collateral (if any) held as security for the Loans, or (vi) the
release of any Guarantee given to support payment of the Loans.
Each Bank selling a participating interest in any Loan (other
than a Money Market Loan), Note (other than a Money Market Note),
Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower and
the Administrative Agent with written notification stating that
such sale has occurred and identifying the Participant and the
interest purchased by such Participant. The Borrower agrees that
each Participant shall be entitled to the benefits of Article
VIII with respect to its participation in Loans outstanding from
time to time.
(c) Any Bank may at any time assign to one or more
banks or financial institutions (each an "Assignee") all, or, in
the case of its Syndicated Loans and Commitments, a proportionate
part of all of its Syndicated Loans and Commitments, of its
rights and obligations under this Agreement, the Notes and the
other Loan Documents, and such Assignee shall assume all such
rights and obligations, pursuant to an Assignment and Acceptance
in the form attached hereto as Exhibit D, executed by such
Assignee, such transferor Bank and the Administrative Agent (and,
in the case of an Assignee that is not then a Bank or an
affiliate of a Bank, by the Borrower); provided that (i) no
interest may be sold by a Bank pursuant to this paragraph (c)
unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Bank's Commitment, (ii) if a Bank is
assigning only a portion of its Commitment, then, the amount of
the Commitment being assigned (determined as of the effective
date of the assignment) shall be equal to $10,000,000 (or any
larger multiple of $500,000), (iii) except during the continuance
of a Default, no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank (or an
Affiliate of a Bank) without the consent of the Borrower and the
Administrative Agent, which consent shall not be unreasonably
withheld, and (iv) a Bank may not have more than 2 Assignees that
are not then Banks at any one time. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee,
the Administrative Agent and (if applicable) the Borrower, (B)
delivery of an executed copy of the Assignment and Acceptance to
the Borrower and the Administrative Agent, (C) payment by such
Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such
Assignee, and (D) payment of a processing and recordation fee of
$2,500 to the Administrative Agent, such Assignee shall for all
purposes be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank under this Agreement to the same
extent as if it were an original party hereto with a Commitment
as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by the
Borrower, the Banks or the Administrative Agent shall be
required. Upon the consummation of any transfer to an Assignee
pursuant to this paragraph (c), the transferor Bank, the
Administrative Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note or Notes will be
issued to such Assignee.
(d) Subject to the provisions of Section 9.09, the
Borrower authorizes each Bank to disclose to any Participant,
Assignee or other transferee (each a "Transferee") and any
prospective Transferee any and all financial information in such
Bank's possession concerning the Borrower which has been
delivered to such Bank by the Borrower pursuant to this Agreement
or which has been delivered to such Bank by the Borrower in
connection with such Bank's credit evaluation prior to entering
into this Agreement.
(e) No Transferee shall be entitled to receive any
greater payment under Sections 2.12, 8.02, 8.03, or 8.05 than the
transferor Bank would have been entitled to receive with respect
to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions
of Section 8.02 or 8.03 requiring such Bank to designate a
different Lending Office under certain circumstances or at a time
when the circumstances giving rise to such greater payment did
not exist.
(f) Anything in this Section 9.08 to the contrary
notwithstanding, any Bank may assign and pledge all or any
portion of the Loans and/or obligations owing to it to any
Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect
of such assigned Loans and/or obligations made by the Borrower to
the assigning and/or pledging Bank in accordance with the terms
of this Agreement shall satisfy the Borrower's obligations
hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the
assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.09. Confidentiality. Each Bank agrees to
keep any information disclosed by the Borrower to it confidential
from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loans, if such
information has not been publicly disclosed or is otherwise not
in the public domain and if it was disclosed to the Bank under
circumstances that would lead a reasonably prudent person to
believe that such information has not been publicly disclosed or
is otherwise not in the public domain or if it is otherwise
designated in writing to the Banks as confidential; provided,
however that nothing herein shall prevent any Bank from
disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency (provided, that, the
Borrower shall be notified of any relevant order and given an
opportunity to seek a protective order with respect to any such
disclosure to the extent that any Bank may provide such notice to
the Borrower without violating the terms of any relevant order),
(iii) upon the request or demand of any regulatory agency or
authority having jurisdiction over such Bank, (iv) which has been
publicly disclosed by the Borrower or any of its agents or
advisors, (v) to the extent reasonably required in connection
with any litigation to which the Administrative Agent, any Bank
or their respective Affiliates may be a party, (vi) to the extent
reasonably required in connection with the exercise of any remedy
hereunder, (vii) to such Bank's legal counsel and independent
auditors and (viii) to any actual or proposed Participant,
Assignee or other Transferee of all or part of its rights
hereunder which has agreed in writing to be bound by the
provisions of this Section 9.09.
SECTION 9.10. Representation by Banks. Each Bank
hereby represents that:
(i) it is a commercial lender or financial
institution which makes Loans in the ordinary course of its
business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided,
however that, subject to Section 9.08, the disposition of the
Note or Notes held by that Bank shall at all times be within its
exclusive control;
(ii) the execution, delivery and performance by
it of this Agreement, (x) is within its powers, (y) have been
duly authorized by all necessary action, and require no action by
or in respect of or filing with, any governmental body, agency or
official;
(iii) this Agreement constitutes a valid and
binding agreement enforceable against it in accordance with its
terms, provided that the enforceability hereof and thereof is
subject in each case to general principles of equity, to
bankruptcy, insolvency and similar laws affecting the enforcement
of creditors' rights generally and to specific law affecting the
enforcement of obligations against national and state banks; and
(iv) Each Bank represents that it is either (i) a
corporation or association organized under the laws of the United
States of America or any state thereof or (ii) it is entitled to
complete exemption from United States withholding tax imposed on
or with respect to any payments, including fees, to be made to it
pursuant to this Agreement (A) under an applicable provision of a
tax convention to which the United States of America is a party
or (B) because it is acting through a branch, agency or office in
the United States of America and any payment to be received by it
hereunder is effectively connected with a trade or business in
the United States of America. Each Bank that is not a
corporation or association organized under the laws of the United
States of America or any state thereof agrees to provide to the
Borrower and the Administrative Agent on the Effective Date, or
on the date of its delivery of the Assignment and Acceptance
pursuant to which it becomes a Bank, and at such other times as
required by United States law, two accurate and complete original
signed copies of either (A) Internal Revenue Service Form 4224
(or successor form) certifying that all payments to be made to it
hereunder will be effectively connected to a United States trade
or business or (B) internal Revenue Service Form 1001 (or
successor form) certifying that it is entitled to the benefits of
a tax convention to which the United States of America is a party
which completely exempts from United States withholding tax all
payments to be made to it hereunder. If a Bank determines, as a
result of any change in applicable United States federal, state
or law or regulations or of other changes in its circumstances,
that it is unable to submit any form or certificate that it is
obligated to submit pursuant to this Section, or that it is
required to withdraw or cancel any such form or certificate
previously submitted, it shall promptly notify the Borrower and
the Administrative Agent of such fact, in which case the Borrower
may be required to make withholdings or deductions from any
payments to be made to such Bank hereunder and the Borrower shall
pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
SECTION 9.11. Obligations Several. The obligations of
each Bank hereunder are several, and no Bank shall be responsible
for the obligations or commitment of any other Bank hereunder.
Nothing contained in this Agreement and no action taken by the
Banks pursuant hereto shall be deemed to constitute the Banks to
be a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to
each Bank shall be a separate and independent debt, and each Bank
shall be entitled to protect and enforce its rights arising out
of this Agreement or any other Loan Document and it shall not be
necessary for any other Bank to be joined as an additional party
in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each
Note shall be construed in accordance with and governed by the
law of the State of Georgia.
SECTION 9.13. Severability. In case any one or more of
the provisions contained in this Agreement, the Notes or any of
the other Loan Documents should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount
of interest, and all charges, amounts or fees contracted for,
charged or collected pursuant to this Agreement, the Notes or the
other Loan Documents and deemed to be interest under applicable
law (collectively, "Interest") exceed the highest rate of
interest allowed by applicable law (the "Maximum Rate"), and in
the event any such payment is inadvertently received by any Bank,
then the excess sum (the "Excess") shall be credited as a payment
of principal, unless the Borrower shall notify such Bank in
writing that it elects to have the Excess returned forthwith. It
is the express intent hereof that the Borrower not pay and the
Banks not receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may legally be paid
by the Borrower under applicable law. The right to accelerate
maturity of any of the Loans does not include the right to
accelerate any interest that has not otherwise accrued on the
date of such acceleration, and the Administrative Agent and the
Banks do not intend to collect any unearned interest in the event
of any such acceleration. All monies paid to the Administrative
Agent or the Banks hereunder or under any of the Notes or the
other Loan Documents, whether at maturity or by prepayment, shall
be subject to rebate of unearned interest as and to the extent
required by applicable law. By the execution of this Agreement,
the Borrower covenants that (i) the credit or return of any
Excess shall constitute the acceptance by the Borrower of such
Excess, and (ii) the Borrower shall not seek or pursue any other
remedy, legal or equitable , against the Administrative Agent or
any Bank, based in whole or in part upon contracting for charging
or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been
contracted for, charged or received by the Administrative Agent
or any Bank, all interest at any time contracted for, charged or
received from the Borrower in connection with this Agreement, the
Notes or any of the other Loan Documents shall, to the extent
permitted by applicable law, be amortized, prorated, allocated
and spread in equal parts throughout the full term of the
Commitments. The Borrower, the Administrative Agent and each
Bank shall, to the maximum extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this
Section shall be deemed to be incorporated into each Note and
each of the other Loan Documents (whether or not any provision of
this Section is referred to therein). All such Loan Documents
and communications relating to any Interest owed by the Borrower
and all figures set forth therein shall, for the sole purpose of
computing the extent of obligations hereunder and under the Notes
and the other Loan Documents be automatically recomputed by the
Borrower, and by any court considering the same, to give effect
to the adjustments or credits required by this Section.
SECTION 9.15. Interpretation. No provision of this
Agreement or any of the other Loan Documents shall be construed
against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.16. Waiver of Jury Trial; Consent to
Jurisdiction. The Borrower (a) and each of the Banks and the
Administrative Agent irrevocably waives, to the fullest extent
permitted by law, any and all right to trial by jury in any legal
proceeding arising out of this Agreement, any of the other Loan
Documents, or any of the transactions contemplated hereby or
thereby, (b) submits to the nonexclusive personal jurisdiction in
the State of Georgia, the courts thereof and the United States
District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (c) waives any
and all personal rights under the law of any jurisdiction to
object on any basis (including, without limitation, inconvenience
of forum) to jurisdiction or venue within the State of Georgia
for the purpose of litigation to enforce this Agreement, the
Notes or the other Loan Documents, and (d) agrees that service of
process may be made upon it in the manner prescribed in Section
9.01 for the giving of notice to the Borrower. Nothing herein
contained, however, shall prevent the Administrative Agent from
bringing any action or exercising any rights against any security
and against the Borrower personally, and against any assets of
the Borrower, within any other state or jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective
authorized officers as of the day and year first above written.
FOOD LION, INC. (SEAL)
By:
Director of Finance and
Treasurer
2110 Executive Drive
Salisbury, North Carolina 28145
Attention: Mr. Michael J. Price
Telecopier number: (704) 636-5024
Confirmation number: (704) 633-8250
WACHOVIA BANK OF GEORGIA, N.A., (SEAL)
as the Administrative Agent and a
Co-Agent
By:
Title:
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Administrative Agency Services
Telecopier number: (404) 332-5019
Confirmation number: (404) 332-6971
COMMITMENTS WACHOVIA BANK OF NORTH CAROLINA,
N.A., as a Bank (SEAL)
$60,000,000.00
By:
Title:
Lending Office
130 South Main Street
Salisbury, North Carolina 28145
Attention: Mr. Bill A. Coleman
Telecopier number: (704) 633-1470
Confirmation number: (704) 638-5948
Address For Payments:
301 North Main Street
Winston-Salem, North Carolina 27102
Attention: Bobbie Clifton
Telecopier number: (704) 633-1470
Confirmation number: (704) 638-5946
Wiring Instructions:
ABA No. 053100494
Notification: For Attention of
Salisbury Office. Food Lion Credit
Facility. Account No. 6895 002 600.
Notify Bobbie Clifton.
Address For Notices Other Than
Payments:
130 South Main Street
Salisbury, North Carolina 28145
Attention: Mr. Bill A. Coleman
Telecopier number: (704) 633-1470
Confirmation number: (704) 638-5948
$40,000,000.00 NATIONSBANK OF NORTH CAROLINA, (SEAL)
N.A., as a Bank and as a Co-Agent
By:
Title:
Lending Office
NationsBank Corporate Center
NC 1007-08-08
Charlotte, North Carolina 28255
Attention: Mr. Thold Gill
Telecopier number: (704) 386-1270
Confirmation number: (704) 386-8206
$30,000,000.00 ABN AMRO BANK N.V. (SEAL)
By:
Title:
Attest:
Title:
Lending Office
1 Ravinia Drive
Suite 1200
Atlanta, Georgia 30346
Attention: Mr. Patrick Thom
Telecopier number: (404) 395-9188
Confirmation number: (404) 396-0066
$25,000,000.00 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA (SEAL)
By:
Title:
Lending Office
First Union National Bank of North
Carolina
201 South College Street
Mail Code NC 0656
Charlotte, NC 28288-0656
Attention:Patrick McCormick
Telecopier number: (704) 374-4820
Confirmation number: (704) 374-6017
$30,000,000.00 THE SAKURA BANK, LTD. (SEAL)
By:
Title:
Lending Office
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attention: Mr. Hutch Corbett
Telecopier number: (404) 521-1133
Confirmation number: (404) 521-3111
$30,000,000.00 THE SUMITOMO BANK, LTD. (SEAL)
By:
Title:
Lending Office
133 Peachtree Street
Suite 3210
Atlanta, Georgia 30303
Attention: Mr. Gary P. Franke
Telecopier number: (404) 521-1187
Confirmation number: (404) 526-8500
$40,000,000.00 TRUST COMPANY BANK (SEAL)
By:
Title:
Attest:
Title:
Lending Office
One Park Plaza, N.E.
MC 118
Atlanta, Georgia 30302
Attention: Mr. Raymond B. King
Telecopier number: (404) 588-8833
Confirmation number: (404) 230-5162
$40,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO (SEAL)
By:
Title:
Lending Office
One First National Plaza
Mail Suite 0374
Chicago, Illinois 60670
Attention: Mr. Steve Farley
Telecopier number: (312) 732-3885
Confirmation number: (312) 732-5995
$25,000,000.00 GENERALE BANK (SEAL)
By:
Title:
Attest:
Title:
Lending Office
520 Madison Avenue
41st Floor
New York, New York 10022
Attention: Mr. Patrick Mertens
Telecopier number: (212) 838-7492
Confirmation number: (212) 418-6801
CRESTAR BANK (SEAL)
$10,000,000.00 By:
Title:
Lending Office
919 East Main Street
22nd Floor
Richmond, Virginia 23261-6665
Attention: T. Patrick Collins
Telecopier number: (804) 782-5413
Confirmation number: (804) 782-5365
$10,000,000.00 HIBERNIA NATIONAL BANK (SEAL)
By:
Title:
Lending Office
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: National Accounts
Telecopier number: (504) 533-5344
Confirmation number: (504) 533-5501
$10,000,000.00 NBD BANK, N.A. (SEAL)
By:
Title:
Lending Office
611 Woodward Avenue
Detroit, Michigan
Attention: Mr. James D. Heinz
Telecopier number: (313) 225-2649
Confirmation number: (313) 225-5227
TOTAL COMMITMENTS:
$350,000,000.00
EXHIBIT A-1
SYNDICATED LOAN NOTE
Atlanta, Georgia
As of November 17, 1994
For value received, FOOD LION, INC., a North Carolina
corporation (the "Borrower"), promises to pay to the order of
, a , (the "Bank"), for the account of its
Lending Office, the principal sum of
and No/100 Dollars ($ ), or such lesser amount as
shall equal the aggregate unpaid principal amount of the
Syndicated Loans made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below, on the dates and in the
amounts provided in the Credit Agreement. The Borrower promises
to pay interest on the unpaid principal amount of this Note on
the dates and at the rate or rates provided for in the Credit
Agreement referred to below. Interest on any overdue principal
of and, to the extent permitted by law, overdue interest on the
principal amount hereof shall bear interest at the Default Rate,
as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at
the office of Wachovia Bank of Georgia, N.A., 191 Peachtree
Street, N.E., Atlanta, Georgia 30303-1757, or such other address
as may be specified from time to time pursuant to the Credit
Agreement.
All Syndicated Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time
applicable thereto, and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Credit Agreement.
This Note is one of the Syndicated Loan Notes referred
to in the Credit Agreement dated as of November 17, 1994, among
the Borrower, the Banks listed on the signature pages thereof,
Wachovia Bank of Georgia, N.A. and NationsBank of North Carolina,
N.A., as Co-Agents, and Wachovia Bank of Georgia, N.A., as
Administrative Agent (as the same may be amended or supplemented
from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and
the acceleration of the maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this
Syndicated Loan Note to be duly executed, under seal, by its duly
authorized officer as of the day and year first above written.
FOOD LION, INC. (SEAL)
By:
Title:
Syndicated Loan Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Base Rate or Amount Amount of
Euro-Dollar of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
EXHIBIT A-2
MONEY MARKET LOAN NOTE
Atlanta, Georgia
As of November 17, 1994
For value received, FOOD LION, INC., a North Carolina
corporation (the "Borrower"), promises to pay to the order of
, a , (the "Bank"), for the account of its
Lending Office, the principal sum of THREE HUNDRED FIFTY MILLION
and No/100 Dollars ($350,000,000), or such lesser amount as shall
equal the aggregate unpaid principal amount of the Money Market
Loans made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, on the dates and in the amounts
provided in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of this Note on the dates
and at the rate or rates provided for in the Credit Agreement
referred to below. Interest on any overdue principal of and, to
the extent permitted by law, overdue interest on the principal
amount hereof shall bear interest at the Default Rate, as
provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at
the office of Wachovia Bank of Georgia, N.A., 191 Peachtree
Street, N.E., Atlanta, Georgia 30303-1757, or such other address
as may be specified from time to time pursuant to the Credit
Agreement.
All Money Market Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time
applicable thereto, and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Credit Agreement.
This Note is one of the Money Market Loan Notes referred
to in the Credit Agreement dated as of November 17, 1994, among
the Borrower, the Banks listed on the signature pages thereof,
Wachovia Bank of Georgia, N.A. and NationsBank of North Carolina,
N.A., as Co-Agents, and Wachovia Bank of Georgia, N.A., as
Administrative Agent (as the same may be amended or supplemented
from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and
the acceleration of the maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Money
Market Loan Note to be duly executed, under seal, by its duly
authorized officer as of the day and year first above written.
FOOD LION, INC. (SEAL)
By:
Title:
Money Market Loan Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Money Amount Amount of Stated
Market of Principal Maturity Notation
Date Rate Loan Repaid Date Made By
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
[Dated as provided in
Section 3.01 of the Credit
Agreement]
To the Banks, the Co-Agents, and
the Administrative Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Administrative Agency Services
Dear Sirs:
We have acted as counsel for FOOD LION, INC., a North
Carolina corporation (the "Borrower") in connection with the
Credit Agreement (the "Credit Agreement") dated as of November
17, 1994, among the Borrower, the banks listed on the signature
pages thereof, Wachovia Bank of Georgia, N.A. and NationsBank of
North Carolina, N.A., as Co-Agents, and Wachovia Bank of Georgia,
N.A., as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion. We have assumed for purposes of our opinions set
forth below that the execution and delivery of the Credit
Agreement by each Bank and by the Administrative Agent and the Co-
Agents have been duly authorized by each Bank, the Co-Agents and
by the Administrative Agent.
Upon the basis of the foregoing, we are of the opinion
that:
1. The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of North
Carolina, has all corporate powers required to carry on its
business as now conducted, and is duly qualified to transact
business in every jurisdiction where, by the nature of its
business, such qualification is necessary.
2. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes (i) are within
the Borrower's corporate powers, (ii) have been duly authorized
by all necessary corporate action, (iii) require no action by or
in respect of, or filing with, any governmental body, agency or
official, (iv) do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other
instrument which to our knowledge is binding upon the Borrower
and (v) to our knowledge, except as provided in the Credit
Agreement, result in the creation or imposition of any Lien on
any asset of the Borrower.
3. The Credit Agreement constitutes a valid and
binding agreement of the Borrower, enforceable against the
Borrower in accordance with its terms, and the Notes constitute
valid and binding obligations of the Borrower, enforceable in
accordance with their respective terms, except as such
enforceability may be limited by: (i) bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
4. To our knowledge, there is no action, suit or
proceeding pending, or threatened, against or affecting the
Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, financial
position or results of operations of the Borrower, or which in
any manner questions the validity or enforceability of the Credit
Agreement or any Note.
5. The Borrower is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
6. Neither the Borrower nor any of its Subsidiaries is
a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as
amended.
7. Neither the Borrower nor any of its Subsidiaries is
a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as
amended.
8. A North Carolina state court and a federal court
situated in the State of North Carolina would uphold the
agreement by the parties to the Credit Agreement that the Credit
Agreement and the other Loan Documents shall be governed by the
laws of the State of Georgia.
[If Borrower's counsel is not qualified to practice
law in the State of North Carolina, then, North Carolina
local counsel will be needed in order to provide
standard North Carolina corporate law opinions.]
We are qualified to practice in the State of _____________
and do not purport to be experts on any laws other than the laws
of the United States and the State of _____________ and this
opinion is rendered only with respect to such laws. We have made
no independent investigation of the laws of any other
jurisdiction.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you,
any Assignee, Participant or other Transferee under the Credit
Agreement, and Jones, Day, Reavis & Pogue without our prior
written consent.
Very truly yours,
EXHIBIT C
OPINION OF
JONES, DAY, REAVIS & POGUE, SPECIAL COUNSEL
FOR THE BANKS AND THE ADMINISTRATIVE AGENT
[Dated as provided in
Section 3.01 of the Credit
Agreement]
To the Banks, the Co-Agents, and
the Administrative Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Administrative Agency Services
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of November 17, 1994,
among FOOD LION, INC., a North Carolina corporation (the
"Borrower"), the banks listed on the signature pages thereof (the
"Banks"), Wachovia Bank of Georgia, N.A. and NationsBank of North
Carolina, N.A., as Co-Agents, and Wachovia Bank of Georgia, N.A.,
as Administrative Agent (the "Administrative Agent"), and have
acted as special counsel for the Banks and the Administrative
Agent for the purpose of rendering this opinion pursuant to
Section 3.01(d) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
This opinion letter is limited by, and is in accordance
with, the January 1, 1992 edition of the Interpretive Standards
applicable to Legal Opinions to Third Parties in Corporate
Transactions adopted by the Legal Opinion Committee of the
Corporate and Banking Law Section of the State Bar of Georgia
which Interpretive Standards are incorporated herein by this
reference.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Credit Agreement and
each of the Notes by or on behalf of the Borrower, we are of the
opinion that the Credit Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes valid and
binding obligations of the Borrower, in each case enforceable in
accordance with its terms except as: (i) the enforceability
thereof may be affected by bankruptcy, insolvency,
reorganization, fraudulent conveyance, voidable preference,
moratorium or similar laws applicable to creditors' rights or the
collection of debtors' obligations generally; (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability; and
(iii) the enforceability of certain of the remedial, waiver and
other provisions of the Credit Agreement and the Notes may be
further limited by the laws of the State of Georgia; provided,
however, such additional laws do not, in our opinion,
substantially interfere with the practical realization of the
benefits expressed in the Credit Agreement and Notes, except for
the economic consequences of any procedural delay which may
result from such laws.
In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction except the
State of Georgia. We express no opinion as to the effect of the
compliance or noncompliance of the Administrative Agent, the Co-
Agents, or any of the Banks with any state or federal laws or
regulations applicable to the Administrative Agent, the Co-
Agents, or any of the Banks by reason of the legal or regulatory
status or the nature of the business of the Administrative Agent,
the Co-Agents, or any of the Banks.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you
and any Assignee, Participant or other Transferee under the
Credit Agreement without our prior written consent.
Very truly yours,
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated , 19
Reference is made to the Credit Agreement dated as of
November 17, 1994 (together with all amendments and modifications
thereto, the "Credit Agreement") among FOOD LION, INC., a North
Carolina corporation (the "Borrower"), the Banks (as defined in
the Credit Agreement), Wachovia Bank of Georgia, N.A. and
NationsBank of North Carolina, N.A., as Co-Agents, and Wachovia
Bank of Georgia, N.A., as Administrative Agent (the
"Administrative Agent"). Terms defined in the Credit Agreement
are used herein with the same meaning.
(the "Assignor") and
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, without recourse a % interest in and to all of
the Assignor's rights and obligations under the Credit Agreement
as of the Effective Date (as defined below) (including, without
limitation, a % interest (which on the Effective Date hereof
is $ ) in the Assignor's Commitment and a
interest (which on the Effective Date hereof is $ )
in the Syndicated Loans [and Money Market Loans] owing to the
Assignor and a % interest in the Note[s] held by the Assignor
(which on the Effective Date hereof is $ ).
2. The Assignor (i) makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement or any other instrument or document
furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder,
that such interest is free and clear of any adverse claim and
that as of the date hereof its Commitment (without giving effect
to assignments thereof which have not yet become effective) is
$__________ and the aggregate outstanding principal amount of the
Syndicated Loans [and Money Market Loans] owing to it (without
giving effect to assignments thereof which have not yet become
effective) is $ ; (ii) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished
pursuant thereto; and (iii) attaches the Note[s] referred to in
paragraph 1. above and requests that the Administrative Agent
exchange such Note[s] as follows: a Syndicated Loan Note dated
, 199 , in the principal amount of $ payable
to the order of the Assignee [and a Money Market Loan Note dated
, 199 in the principal amount of $ payable
to the order of the Assignee].
3. The Assignee (i) confirms that it has received a
copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 4.04(a) thereof (or
any more recent financial statements of the Borrower delivered
pursuant to Section 5.01(a) thereof) and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other
Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is a bank or financial
institution; (iv) appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (v) agrees that it
will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank; (vi) specifies as its
Lending Office (and address for notices) the office set forth
beneath its name on the signature pages hereof, (vii) represents
and warrants that the execution, delivery and performance of this
Assignment and Acceptance are within its corporate powers and
have been duly authorized by all necessary corporate action[, and
(viii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement and the Notes or such other
documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax
treaty].
4. The Effective Date for this Assignment and
Acceptance shall be , 19 (the "Effective Date").
Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for execution and
acceptance by the Administrative Agent and to the Borrower for
execution by the Borrower.
5. Upon such execution and acceptance by the
Administrative Agent [and execution by the Borrower] If the
Assignee is not a Bank prior to the Effective Date and no Default
shall have occurred and be continuing, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent rights and obligations have been
transferred to it by this Assignment and Acceptance, have the
rights and obligations of a Bank thereunder and (ii) the Assignor
shall, to the extent its rights and obligations have been
transferred to the Assignee by this Assignment and Acceptance,
relinquish its rights (other than under Section 8.03 of the
Credit Agreement) and be released from its obligations under the
Credit Agreement.
6. Upon such execution and acceptance by the
Administrative Agent [and execution by the Borrower] If the
Assignee is not a Bank prior to the Effective Date and no Default
shall have occurred and be continuing, from and after the
Effective Date, the Administrative Agent shall make all payments
in respect of the interest assigned hereby to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to such acceptance by the
Administrative Agent directly between themselves.
7. This Assignment and Acceptance shall be governed
by, and construed in accordance with, the laws of the State of
Georgia.
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
Lending Office:
[Address]
WACHOVIA BANK OF GEORGIA, N.A.
as the Administrative Agent
By:
Title:
[FOOD LION, INC.]
If the Assignee is not a Bank prior
to the Effective Date and no Default
shall be in existence.
By:
Title:
EXHIBIT E
NOTICE OF BORROWING
NOTICE OF BORROWING
, 199
Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Administrative Agency Services
Re: Credit Agreement (as amended or supplemented from
time to time, the "Credit Agreement") dated as of
November 17, 1994 by and among FOOD LION, INC., the
Banks from time to time party thereto, Wachovia Bank of
Georgia, N.A. and NationsBank of North Carolina, N.A.,
as Co-Agents, and Wachovia Bank of Georgia, N.A., as
Administrative Agent
Gentlemen:
Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Credit
Agreement.
This Notice of Borrowing is delivered to you pursuant to
Section 2.02 of the Credit Agreement.
The Borrower hereby requests a Syndicated Borrowing in the
aggregate principal amount of $ to be made on ,
199 , and for interest to accrue thereon at the rate
established by the Credit Agreement for [Base Rate] [Euro-Dollar]
Loans. The duration of the Interest Period with respect thereto
shall be [30 days] [1 month] [2 months] [3 months] [6 months].
The Borrower hereby represents and warrants that on the date
the Borrowing requested hereunder is made (both before and after
giving effect to the making of such and after giving effect to
the application, directly or indirectly, of the proceeds
thereof):
(a) no Default has occurred and is continuing; and
(b) the representations and warranties of the Borrower
contained in Article IV of the Credit Agreement are true.
Set forth below is the Borrower's Senior Debt Rating, as of
the date hereof, by each of Standard and Poor's and Moody's:
Standard and Poor's:
Moody's:
The Borrower has not been notified by either Moody's or
Standard and Poor's that their respective Senior Debt Ratings for
the Borrower will be modified in the foreseeable future.
The Borrower has caused this Notice of Borrowing to be
executed and delivered and the certification and warranties
contained herein to be made, by its duly authorized officer this
day of , 199 .
FOOD LION, INC.
By:
Title:
EXHIBIT F
FOOD LION, INC.
CLOSING CERTIFICATE
Reference is made to the Credit Agreement (the "Credit
Agreement") dated as of November 17, 1994, among FOOD LION, INC.,
the Banks listed therein, Wachovia Bank of Georgia, N.A. and
NationsBank of North Carolina, N.A., as Co-Agents, and Wachovia
Bank of Georgia, N.A., as Administrative Agent. Capitalized
terms used herein have the meanings ascribed thereto in the
Credit Agreement.
Pursuant to Section 3.01(e) of the Credit Agreement,
Michael J. Price, the duly authorized Director of Finance and
Treasurer of Food Lion, Inc. hereby certifies to the
Administrative Agent, the Co-Agents, and the Banks that (i) no
Default has occurred and is continuing as of the date hereof, and
(ii) the representations and warranties contained in Article IV
of the Credit Agreement are true on and as of the date hereof.
Certified as of the 17th day of November, 1994.
By:
Michael J. Price
Director of Finance and
Treasurer
EXHIBIT G
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of
November 17, 1994 (as modified and supplemented and in effect
from time to time, the "Credit Agreement") among Food Lion, Inc.,
the Banks from time to time party thereto, Wachovia Bank of
Georgia, N.A. and NationsBank of North Carolina, N.A., as Co-
Agents, and Wachovia Bank of Georgia, N.A., as a Bank and as the
Administrative Agent. Capitalized terms used herein shall have
the meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 5.01(d) of the Credit Agreement,
, the duly authorized of
Food Lion, Inc. hereby certifies to the Administrative Agent, the
Co-Agents, and the Banks that the information contained in the
Compliance Check List attached hereto is true, accurate and
complete as of , 199 , and that no Default is in
existence.
By:
Title:
COMPLIANCE CHECK LIST
(Food Lion, Inc.)
, 199
1. Loans and Advances. (Section 5.03)
Neither the Borrower nor any of its Subsidiaries shall make
loans or advances to any Person except as permitted by
Section 5.04 and except: (i) loans or advances to employees
not exceeding $10,000,000 in the aggregate principal amount
outstanding at any time, in each case made in the ordinary
course of business and consistent with practices existing on
the Closing Date, (ii) deposits required by government
agencies or public utilities and (iii) loans or advances to
Wholly Owned Subsidiaries of the Borrower; provided that
after giving effect to the making of any loans, advances or
deposits permitted by clause (i) or (ii) of this Section, the
Borrower will be in full compliance with all the provisions
of this Agreement.
(a) Loans or Advances To Employees $
Limitation $10,000,000
2. Investments. (Section 5.04)
Neither the Borrower nor any of its Subsidiaries shall make
Investments in any Person except as permitted by Section 5.03
and except Investments in (i) direct obligations of the
United States Government (or obligations guaranteed by the
United States Government or any agency thereof) maturing
within one year, (ii) time deposits, bank accounts,
certificates of deposit issued by a commercial bank whose
credit is reasonably satisfactory to the Administrative
Agent, provided, that, any such commercial bank shall be
acceptable so long as either (w) the Borrower shall have
given the Agent written notice of the Borrower's intention to
make investments in such Bank from time to time and the Agent
shall not have delivered written notice to the Borrower of
its dissatisfaction with any such Bank within 10 Business
Days following the Agent's receipt of notice from the
Borrower, (x) in the case of bank accounts, the monthly
average deposits do not $1,000,000 or (y) in all other cases
referred to in this clause (ii), the aggregate obligations
owing by such commercial bank to the Borrower do not exceed
$1,000,000 at any time, (iii) commercial paper rated A1 or
the equivalent thereof by Standard & Poor's or P1 or the
equivalent thereof by Moody's and in either case maturing
within one year after the date of acquisition, (iv) tender
bonds the payment of the principal of and interest on which
is fully supported by a letter of credit issued by a United
States bank whose long-term certificates of deposit are
rated at least AA or the equivalent thereof by Standard &
Poor's and Aa2 or the equivalent thereof by Moody's, (v)
euro-dollar deposits in financial institutions whose credit
quality is satisfactory to the Administrative Agent,
(vi) prepaid expenses, and similar items arising in the
ordinary course of business; (vii) stock, obligations or
other securities received in settlement of debts owing to the
Borrower or its Subsidiaries or as a result of a bankruptcy
or insolvency proceedings or upon the foreclosure, perfection
or enforcement of any lien in favor of the Borrower or its
Subsidiaries, in each case as to debt arising in the ordinary
course of business of the Borrower or such Subsidiary, (viii)
Subsidiaries of the Borrower, (ix) Repurchase Obligations
with a term of seven days for underlying securities of the
types described in clause (i) above with banks meeting the
qualifications in clause (iv) above; (x) Investments in money
market funds substantially all of whose assets comprise
securities of the types described in clauses (i), (ii),
(iii), and (iv) (without any requirement for approval by the
Administrative Agent), and/or (xi) Persons in connection with
the acquisition, construction and ownership of stores and/or
shopping centers in which stores are located, provided that
such investments shall not in the aggregate exceed at any
time $25,000,000.00.
List of Investments in excess Permitted by the following
of $10,000,000: provision of Section 5.04
(a) __________________________ _________________________
(b) __________________________ _________________________
(c) __________________________ _________________________
(d) __________________________ _________________________
(e) __________________________ _________________________
(f) __________________________ _________________________
(g) __________________________ _________________________
(h) __________________________ _________________________
Total Amount of Investments $________________________
3. Negative Pledge. (Section 5.05)
Amount of Debt Secured by
Liens (Schedule - 4) $
Limitation $
(product of (x) 0.20 multiplied by
(y) Consolidated Tangible Net Worth)
No Liens exist except as permitted
by Section 5.05
4. Consolidations, Mergers and Sales of Assets. (Section 5.08)
The Borrower will not, nor will it permit any Subsidiary to,
consolidate or merge with or into, or sell, lease or
otherwise transfer all or any substantial part of its assets
to, any other Person (excluding sales of assets in the
ordinary course of business), or discontinue or eliminate any
business line or segment, provided that (a) the Borrower may
merge with another Person if (i) such Person was organized
under the laws of the United States of America or one of its
states, (ii) the Borrower is the corporation surviving such
merger and (iii) immediately after giving effect to such
merger, no Default shall have occurred and be continuing, (b)
Wholly Owned Subsidiaries of the Borrower may merge with one
another, (c) the Borrower and its Wholly Owned Subsidiaries
may transfer assets among each other in the exercise of their
reasonable business judgment, and (d) the foregoing
limitation on the sale, lease or other transfer of assets and
on the discontinuation or elimination of a business line or
segment shall not prohibit a transfer of assets or the
discontinuance or elimination of a business line or segment
(in a single transaction or in a series of related
transactions) unless the aggregate assets to be so
transferred or utilized in a business line or segment to be
so discontinued, when combined with all other assets
transferred (including, without limitation, pursuant to a
sale and leaseback transaction), and all other assets
utilized in all other business lines or segments
discontinued, during the period from the Closing Date through
and including the date of any such relevant sale or
disposition would exceed 20.0% of Consolidated Total Assets
in any consecutive 36 month period; provided, that, to the
extent that assets sold by the Borrower are replaced, by the
Borrower within 90 days, with similar assets having a fair
market value at least equal to the assets so sold, then the
value of the assets sold shall not be included in calculating
future assets permitted to be sold under this Section 5.10.
For purposes of determining compliance with this Section,
Consolidated Total Assets shall be determined by reference to
the Borrower's most recently audited financial statements
provided to the Administrative Agent and the Banks pursuant
to Section 5.01(a).
(aa) Consolidated Total Assets
as of the Closing Date $______________
(bb) product of 20.0% times (aa) $______________
(cc) aggregate book value of
assets sold since the
Closing Date $______________
5. Fixed Charges Coverage. (Section 5.17)
At the end of each Fiscal Quarter, commencing with the Fiscal
Quarter ending December 31, 1994, the ratio of Cash Available
for Fixed Charges for the immediately preceding 4 Fiscal
Quarters then ended to Consolidated Fixed Charges for the
immediately preceding 4 Fiscal Quarters then ended, shall not
have been less than 2.25 to 1.00.
(a) Cash Available for Fixed Charges Schedule - 3 $
(b) Consolidated Fixed Charges Schedule - 2 $
Ratio of (a) to (b)
Minimum Requirement 2.25 to 1.0
6. Ratio of Consolidated Debt to Consolidated Total
Capitalization. (Section 5.18)
The ratio of Consolidated Debt to Consolidated Capitalization
shall not at any time exceed 0.60 to 1.00.
(a) Consolidated Debt $
(b) Consolidated Total Capitalization $
(c) Ratio of (a) to (b)
Requirement 0.60 to 1.00
7. Debt of Subsidiaries (Section 5.20)
The Borrower shall not permit any Subsidiary to incur any Debt
except for (i) Debt owing to the Borrower, and (ii) other Debt
which shall not exceed in the aggregate for all Subsidiaries an
amount in excess of $20,000,000.00.
Description
______________________________ $_____________
______________________________ $_____________
______________________________ $_____________
Total $
Aggregate Limitation $20,000,000.00
Schedule - 1
Consolidated Tangible Net Worth
Stockholders' Equity $
Less:
Surplus from write-up of assets subsequent $
to ____________, 199__
Intangibles $
Loans or advances to stockholders, $
directors, officers or employees
Capital Stock shown as assets $
Deferred expenses $
Consolidated Tangible Net Worth $
Description of Intangibles
(a) $
(b) $
(c) $
Total $
Schedule - 2
Consolidated Fixed Charges
I. Consolidated operating and capitalized lease
rental expenses for:
quarter 199 - $
quarter 199 - $
quarter 199 - $
quarter 199 - $
Total $
II. Consolidated Interest Expense1 for:
quarter 199 - $
quarter 199 - $
quarter 199 - $
quarter 199 - $
Total $
Total Consolidated Fixed Charges $
_________________
1 excluding interest on capitalized leases to the extent included in
I. above.
Schedule - 3
Cash Available for Fixed Charges
quarter 199
Consolidated Net Income $
Taxes on income $
Consolidated Interest Expense $
Rentals $
Depreciation $
Amortization $
Non-cash charges (minus
non-cash gains) [(]$ [)]
$
quarter 199
Consolidated Net Income $
Taxes on income $
Consolidated Interest Expense $
Rentals $
Depreciation $
Amortization $
Non-cash charges (minus
non-cash gains) [(]$ [)]
$
quarter 199
Consolidated Net Income $
Taxes on income $
Consolidated Interest Expense $
Rentals $
Depreciation $
Amortization $
Non-cash charges (minus
non-cash gains) [(]$ [)]
$
quarter 199
Consolidated Net Income $
Taxes on income $
Consolidated Interest Expense $
Rentals $
Depreciation $
Amortization $
Non-cash charges (minus
non-cash gains) [(]$ [)]
Cash Available for Fixed Charges $
$
Schedule - 4
Liens Securing Debt In the Principal
Amount of $10,000,000 Or More
Relevant Provision
of Section 5.05
Description of Lien Amount of Debt Secured Permitting Same
1. $
2. $
3. $
4. $
5. $
6. $
7. $
8. $
9. $
Total Amount of Debt Secured by Liens $_________________
EXHIBIT H
MONEY MARKET QUOTE REQUEST
Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Administrative Agency Services
Re: Money Market Quote Request
This Money Market Quote Request is given in accordance
with Section 2.03 of the Credit Agreement (as amended or modified
from time to time, the "Credit Agreement") dated as of November
17, 1994, among FOOD LION, INC., the Banks from time to time
parties thereto, Wachovia Bank of Georgia, N.A. and NationsBank
of North Carolina, N.A., as Co-Agents, and WACHOVIA BANK OF
GEORGIA, N.A., as Administrative Agent. Terms defined in the
Credit Agreement are used herein as defined therein.
The Borrower hereby requests that the Administrative Agent
obtain quotes for a Money Market Borrowing based upon the
following:
1. The proposed date of the Money Market Borrowing
shall be , 19 (the "Quotation Date").1
2. The aggregate amount of the Money Market Borrowing
shall be $ .2
3. The Stated Maturity Date(s) applicable to the
Money Market Borrowing shall be days.3
4. The Borrower's Senior Debt Rating, as of the date
hereof, is __________ by Standard & Poor's and
__________ by Moody's.4
1 The date must be a Domestic Business Day.
2 The amount of the Money Market Borrowing is subject to
Section 2.03(a) and (b).
3 The Stated Maturity Dates are subject to Section
2.03(b)(ii). The Borrower may request that up to 3
different Stated Maturity Dates be applicable to any Money
Market Borrowing, provided, that (i) each such Stated
Maturity Date shall be deemed to be a separate Money Market
Quote Request and (ii) the Borrower shall specify the
amounts of such Money Market Borrowing to be subject to each
such different Stated Maturity Date.
4 Money Market Loans are not available unless the Borrower's
Senior Debt Rating is at least BBB- by Standard & Poor's or
Baa3 by Moody's.
This Money Market Quote Request is provided by the
Borrower as of the ______ day of _____________ 199_, and is
subject to all of the terms and conditions pertaining thereto in
the Credit Agreement.
FOOD LION, INC.
By:
Title:
EXHIBIT I
MONEY MARKET QUOTE
Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Administrative Agency Services
Re: Money Market Quote to FOOD LION, INC.
This Money Market Quote is given in accordance with
Section 2.03(c)(ii) of the Credit Agreement (as amended or
modified from time to time, the "Credit Agreement") dated as of
November 17, 1994, among FOOD LION, INC. (the "Borrower"), the
Banks from time to time parties thereto, Wachovia Bank of
Georgia, N.A. and NationsBank of North Carolina, N.A., as Co-
Agents, and WACHOVIA BANK OF GEORGIA, N.A., as Administrative
Agent. Terms defined in the Credit Agreement are used herein as
defined therein.
In response to the Borrower's Money Market Quote
Request dated , 19 , we hereby make the following
Money Market Quote on the following terms:
1. Quoting Bank:
2. Person to contact
at Quoting Bank:
3. Date of Borrowing:1*
4. We hereby offer to make Money Market Loan(s) in the
following minimum and maximum principal amounts for the following
Interest Periods and at the following rates:
Minimum Maximum Stated
Principal Principal Maturity
Amount 2 Amount 2 Date 3 Rate Per Annum4
* All numbered footnotes appear on the last page of this
Exhibit I.
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions
set forth in the Credit Agreement, irrevocably obligate(s) us to
make the Money Market Loan(s) for which any offer(s) [is] [are]
accepted, in whole or in part (subject to the last sentence of
Section 2.03(c)(i) of the Credit Agreement).
Very truly yours,
[Name of Bank]
Dated: By:
Authorized Officer
1 As specified in the related Money Market Quote Request.
2 The principal amount bid for each Stated Maturity Date may
not exceed the principal amount requested. Money Market
Quotes must be made for at least $5,000,000 or a larger
multiple of $1,000,000.
3 The Stated Maturity Dates are subject to Section 2.03(b)(ii).
4 Subject to Section 2.03(c)(ii)(C).
EXHIBIT J
FORM OF SUBSIDIARY GUARANTY
THIS LIMITED GUARANTY (this "Guaranty") is made as of
the day of , 199 , by ,
a corporation (the "Guarantor") in favor of the
Administrative Agent, for the ratable benefit of the Banks, under
the Credit Agreement referred to below;
W I T N E S E T H
WHEREAS, Food Lion, Inc. (the "Principal") and WACHOVIA
BANK OF GEORGIA, N.A., as Administrative Agent (the
"Administrative Agent"), Wachovia Bank of Georgia, N.A. and
NationsBank of North Carolina, N.A., as Co-Agents, and certain
other Banks from time to time party thereto have entered into a
certain Credit Agreement dated as of November 17, 1994, (as same
may be amended or modified from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Banks to the
Principal for the benefit of the Principal;
WHEREAS, the Subsidiary desires to incur Debt and it is
a condition precedent to the incurrence of such Debt by the
Guarantor pursuant to clause (ii) of Section 5.20 of the Credit
Agreement, that the Guarantor execute and deliver this Guaranty
whereby the Guarantor shall Guarantee the payment when due of all
principal, interest and other amounts that shall be at any time
payable by the Principal under the Credit Agreement, the Notes
and the other Loan Documents, subject to the limitations
contained in Section 3 hereof; and
WHEREAS, in consideration of the financial and other
support that the Principal have provided, and such financial and
other support as the Principal may in the future provide, to
Guarantor (including, without limitation, direct or indirect
loans, advances and other financial accommodations), and in order
to induce the Banks and the Administrative Agent to permit,
pursuant to Section 5.20(ii) of the Credit Agreement, the
incurrence of Debt by the Subsidiary, the Guarantor is willing to
Guarantee the obligations of the Principal under the Credit
Agreement, the Notes, and the other Loan Documents as provided
herein;
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions. Terms defined in the Credit
Agreement and not otherwise defined herein have, as used herein,
the respective meanings provided for therein.
SECTION 2. Representations and Warranties. The
Guarantor incorporates herein by reference as fully as if set
forth herein all of the representations and warranties pertaining
to it as a Subsidiary contained in Article IV of the Credit
Agreement (which representations and warranties shall be deemed
to have been renewed by the Guarantor upon each Borrowing under
the Credit Agreement).
SECTION 3. The Guaranty. The Guarantor hereby
unconditionally (and jointly and severally with any other
Subsidiary Guarantor) Guarantees the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise) of
the principal of and interest on each Note issued by the
Principal pursuant to the Credit Agreement, and the full and
punctual payment of all other amounts payable by the Principal
under the Credit Agreement and the other Loan Documents (all of
the foregoing obligations being referred to collectively as the
"Guaranteed Obligations"). Upon failure by the Principal to pay
punctually any such amount, the Guarantor agrees that it shall
forthwith on demand pay the amount not so paid at the place and
in the manner specified in the Credit Agreement, the relevant
Note or the relevant Loan Document, as the case may be.
Notwithstanding the foregoing, the Guarantor shall not have any
liability hereunder for an amount in excess of the greater of:
(A) (i) the sum of (x) the aggregate principal amount of all
loans, advances and other financial accommodations made to the
Guarantor by the Principal, directly or indirectly, both prior to
and after the date hereof, less (y) all amounts repaid by the
Guarantor thereon; plus (ii) interest on the amount determined
under clause (i) from the date due until the date paid at the
Default Rate; plus (iii) all costs of collection, including
reasonable attorneys fees; and (B) the maximum amount of
liability which could be asserted against the Guarantor hereunder
without (i) rendering the Guarantor "insolvent" within the
meaning of Section 101(31) of the Federal Bankruptcy Code (the
"Bankruptcy Code") or Section 2 of either the Uniform Fraudulent
Transfer Act (the "UFTA") or the Uniform Fraudulent Conveyance
Act (the "UFCA"), (ii) leaving the Guarantor with unreasonably
small capital, within the meaning of Section 548 of the
Bankruptcy Code or Section 4 of the UFTA or Section 5 of the UFCA
or (iii) leaving such Contributing Party unable to pay its debts
as they become due within the meaning of Section 548 of the
Bankruptcy Code or Section 4 of the UFTA or Section 6 of the
UFCA, or (iv) rendering the obligation of the Guarantor hereunder
avoidable under any other applicable state statute pertaining to
fraudulent transfers.
SECTION 4. Guaranty Unconditional. The obligations of
the Guarantor hereunder shall be unconditional and absolute,
except as expressly limited by Section 3, and, without limiting
the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement,
compromise, waiver or release in respect of any
obligation of the Principal under the Credit Agreement,
any Note, or any other Loan Document, by operation of
law or otherwise or any obligation of any other
guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or
supplement to the Credit Agreement, any Note, or any
other Loan Document;
(iii) any release, nonperfection or
invalidity of any direct or indirect security for any
obligation of the Principal under the Credit Agreement,
any Note, any Loan Document, or any obligations of any
other guarantor of any of the Guaranteed Obligations;
(iv) any change in the corporate existence,
structure or ownership of the Principal or any other
guarantor of any of the Guaranteed Obligations, or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Principal, or any other
guarantor of the Guaranteed Obligations, or its assets
or any resulting release or discharge of any obligation
of the Principal, or any other guarantor of any of the
Guaranteed Obligations;
(v) the existence of any claim, setoff or
other rights which the Guarantor may have at any time
against the Principal, any other guarantor of any of the
Guaranteed Obligations, the Administrative Agent, any
Bank or any other Person, whether in connection herewith
or any unrelated transactions, provided that nothing
herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability
relating to or against the Principal, or any other
guarantor of any of the Guaranteed Obligations, for any
reason related to the Credit Agreement, any other Loan
Document, or any other Subsidiary Guaranty, or any
provision of applicable law or regulation purporting to
prohibit the payment by the Principal, or any other
guarantor of the Guaranteed Obligations, of the
principal of or interest on any Note or any other amount
payable by the Principal under the Credit Agreement, the
Notes, or any other Loan Document; or
(vii) any other act or omission to act or
delay of any kind by the Principal, any other guarantor
of the Guaranteed Obligations, the Administrative Agent,
any Bank or any other Person or any other circumstance
whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of
any Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances. The Guarantor's
obligations hereunder shall remain in full force and effect
until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Credit Agreement shall
have terminated or expired. If at any time any payment of
the principal of or interest on any Note or any other amount
payable by the Principal under the Credit Agreement or any
other Loan Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or
reorganization of the Principal or otherwise, the
Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been
due but not made at such time.
SECTION 6. Waiver of Notice by the Guarantor. The
Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and, to the fullest extent permitted by law,
any notice not provided for herein, as well as any
requirement that at any time any action be taken by any
Person against the Principal, any other guarantor of the
Guaranteed Obligations, or any other Person.
SECTION 7. Other Waivers by the Guarantor. The
Guarantor hereby expressly waives, renounces, and agrees not
to assert, any right, claim or cause of action, including,
without limitation, a claim for reimbursement, subrogation,
indemnification or otherwise, against the Principal arising
out of or by reason of this Guaranty or the obligations of
the Guarantor hereunder, including, without limitation, the
payment or securing or purchasing of any of the Guaranteed
Obligations by any of the Guarantor. The waiver,
renunciation and agreement contained in the immediately
preceding sentence is for the benefit of the Administrative
Agent and the Banks and also for the benefit of the
Principal who may assert the benefits thereof as a
third-party beneficiary, and the Guarantor may be released
from such waiver, renunciation and agreement only by the
execution and delivery, by the Administrative Agent, the
Required Banks and the Principal, of an instrument expressly
releasing the Guarantor therefrom.
SECTION 8. Stay of Acceleration. If acceleration
of the time for payment of any amount payable by the
Principal under the Credit Agreement, any Note or any other
Loan Document is stayed upon the insolvency, bankruptcy or
reorganization of the Principal, all such amounts otherwise
subject to acceleration under the terms of the Credit
Agreement, any Note or any other Loan Document shall
nonetheless be payable by the Guarantor hereunder forthwith
on demand by the Administrative Agent made at the request of
the Required Banks.
SECTION 9. Notices. All notices, requests and
other communications to any party hereunder shall be given
or made by telecopier or other writing and telecopied or
mailed or delivered to the intended recipient at its address
or telecopier number set forth on the signature pages hereof
or such other address or telecopy number as such party may
hereafter specify for such purpose by notice to the
Administrative Agent in accordance with the provisions of
Section 9.01 of the Credit Agreement. Except as otherwise
provided in this Guaranty, all such communications shall be
deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a
mailed notice, 72 hours after such communication is
deposited in the mails with first class postage prepaid, in
each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by
the Administrative Agent or any Banks in exercising any
right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies provided in this Guaranty, the Credit
Agreement, the Notes, and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11. Successors and Assigns. This Guaranty
is for the benefit of the Administrative Agent and the Banks
and their respective successors and assigns and in the event
of an assignment of any amounts payable under the Credit
Agreement, the Notes, or the other Loan Documents, the
rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty may not be assigned by the
Guarantor without the prior written consent of the
Administrative Agent and the Required Banks, and shall be
binding upon the Guarantor and its successors and permitted
assigns.
SECTION 12. Changes in Writing. Neither this
Guaranty nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed
by the Guarantor and the Administrative Agent with the
consent of the Required Banks.
SECTION 13. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF GEORGIA. EACH OF THE GUARANTOR AND THE
ADMINISTRATIVE AGENT HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT
SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF
THE GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to
be made by the Guarantor hereunder shall be made without
setoff or counterclaim and free and clear of and without
deduction or withholding for or on account of, any present
or future Taxes, as required pursuant to Section 2.12(d) of
the Credit Agreement.
IN WITNESS WHEREOF, the Guarantor have each caused
this Guaranty to be duly executed by its authorized officer
as of the date first above written.
By:
Title:
,
Attention:
Telecopier number:
Confirmation number:
Schedule 4.08
Subsidiaries
Name Jurisdiction of Incorporation
None.
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands except Years Ended
per share amounts)
December 31, January 1, January 2,
1994 1994 1993
PRIMARY
NET INCOME $152,898 $ 3,852 $178,005
WEIGHTED AVERAGE COMMON
SHARES AND OTHER COMMON
STOCK EQUIVALENTS:
COMMON STOCK OUTSTANDING 483,708 483,701 483,663
STOCK OPTIONS 149 97
483,708 483,850 483,760
PRIMARY EARNINGS PER SHARE (*) $ .3161 $ .0080 $ .3680
FULLY DILUTED
NET INCOME $152,898 $ 3,852 $178,005
ELIMINATION OF INTEREST EXPENSE,
NET OF RELATED TAX EFFECT,
APPLICABLE TO 5% CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2003
ADJUSTED INCOME APPLICABLE TO
COMMON STOCK 3,508
156,406 3,852 178,005
WEIGHTED AVERAGE COMMON
SHARES AND OTHER COMMON
STOCK EQUIVALENTS:
COMMON STOCK OUTSTANDING 483,708 483,701 483,663
STOCK OPTIONS 195 97
SHARES ISSUABLE UPON
CONVERSION OF 5% CONVERTIBLE
SUBORDINATED DEBENTURES DUE
2003 (AS OF DATE OF ISSUE
JUNE 14, 1993) 14,557
498,265 483,896 483,760
FULLY DILUTED EARNINGS PER SHARE (*) $ .3139 $ .0080 $ .3680
(*) NOTE: Dilution is less than 3%. Therefore, common stock equivalents
have been excluded from the total weighted average common shares.
Five Year Summary of Operations
(Dollars in thousands 1994 1993 1992
except per share amounts) (53 Weeks)
1. Net sales $7,932,592 7,609,817 7,195,923
2. Income before taxes $ 252,698 6,352 290,605
3. Net income $ 152,898 3,852 178,005
4. Current assets $1,131,114 1,139,472 1,148,725
5. Non-current assets $1,356,673 1,364,211 1,372,767
6. Total assets $2,487,787 2,503,683 2,521,492
7. Current liabilities $ 697,228 619,271 986,274
8. Long-term debt $ 355,300 569,350 240,537
9. Capital lease obligations,
deferred taxes and other
liabilities $ 407,906 397,508 338,962
10. Shareholders' equity $1,027,353 917,554 955,719
11. Cash dividends
Class A $ 22,021 21,483 27,355
Class B $ 21,131 20,603 26,457
12. Depreciation $ 139,834 143,042 121,616
13. Number of stores
opened (net) # (57) 84 131
14. Number of stores open # 1,039 1,096 1,012
15. Total store square
footage (000) # 27,335 28,950 26,428
16. Number of employees # 64,840 65,494 59,721
17. Weighted average shares
outstanding (000) # 483,708 483,701 483,663
18. Number of Deli/Bakery stores # 575 553 446
19. Earnings per share (a) $ .32 .01 .37
20. Dividends per share (a) $ .089 .087 .111
21. Book value per share (a) $ 2.12 1.90 1.98
22. Asset turnover x 3.18 3.03 3.17
23. Return on sales % 1.93 .05 2.47
24. Return on assets % 6.13 .15 7.84
25. Return on equity % 15.72 .41 19.92
26. Equity ratio % 41.30 36.65 37.90
27. Return on investment % 16.69 5.68 20.02
28. Current ratio x 1.62 1.84 1.16
29. Recapitalization and
stock splits 3 for 2
(Dollars in thousands 1991 1990
except per share amounts)
1. Net sales $6,438,507 5,584,410
2. Income before taxes $ 340,671 284,471
3. Net income $ 205,171 172,571
4. Current assets $ 983,370 787,869
5. Non-current assets $1,035,922 791,996
6. Total assets $2,019,292 1,579,865
7. Current liabilities $ 676,768 597,392
8. Long-term debt $ 240,810 91,721
9. Capital lease obligations,
deferred taxes and other
liabilities $ 270,659 217,694
10. Shareholders' equity $ 831,055 673,058
11. Cash dividends
Class A $ 24,393 21,926
Class B $ 23,638 21,082
12. Depreciation $ 104,614 81,432
13. Number of stores
opened (net) # 103 115
14. Number of stores open # 881 778
15. Total store square
footage (000) # 22,480 19,424
16. Number of employees # 53,583 47,276
17. Weighted average shares
outstanding (000) # 483,516 483,210
18. Number of Deli/Bakery stores # 279 183
19. Earnings per share (a) $ .42 .36
20. Dividends per share (a) $ .099 .089
21. Book value per share (a) $ 1.72 1.39
22. Asset turnover $ 3.58 3.90
23. Return on sales $ 3.19 3.09
24. Return on assets $ 11.40 12.06
25. Return on equity $ 27.28 28.49
26. Equity ratio $ 41.16 42.60
27. Return on investment $ 26.09 29.33
28. Current ratio $ 1.45 1.32
29. Recapitalization and
stock splits
Notes to Five Year Summary of Operations
(a) Amounts are based upon the weighted average number of the Class A and
Class B common shares outstanding.
DEFINITIONS
Line
13. Number of stores opened (net) - Number of stores opened less stores
closed during the year.
14. Number of stores open - Number of stores operating at year-end.
16. Number of employees - Number of full-time and part-time employees at
year-end.
17. Weighted average shares outstanding - Weighted average shares outstanding
have been restated to reflect the stock split in 1992.
18. Number of Deli/Bakery stores - Number of stores with Deli/Bakery at year-
end.
19. Earnings per share - Net income per common share (line 3 , line 17).
20. Dividends per share - Cash dividends per common share (line 11 , line
17).
21. Book value per share - Book value of shareholders' equity per common
share (line 10 , line 17).
22. Asset turnover - The ratio of sales per dollar of assets employed during
the year. It is calculated by dividing sales by the average total assets
(line 1 , line 6).
23. Return on sales - The percentage of net income earned on each dollar of
sales (line 3 , line 1).
24. Return on assets - The percentage of net income earned on average total
assets (line 3 , line 6).
25. Return on equity - The percentage of net income earned on average
shareholders' equity (line 3 , line 10).
26. Equity ratio - Shows the share of total assets of the business owned by
the shareholders as opposed to outside sources. It is calculated by
dividing year-end shareholders' equity by year-end total assets
(line 10 , line 6).
27. Return on investment - The percentage of net income, excluding interest
expense,to invested capital. ([line 3 + interest] , [average line 8 +
average line 10]).
28. Current ratio - The ratio of current assets to current liabilities
(line 4 , line 7).
Statements of Income
Years Ended
December 31, January 1, January 2,
(Dollars in thousands 1994 1994 1993
except per share amounts)
Net sales $7,932,592 $7,609,817 $7,195,923
Cost of goods sold 6,323,693 6,121,274 5,759,534
Gross profit 1,608,899 1,488,543 1,436,389
Selling and administrative
expenses 1,129,803 1,096,306 975,111
Interest expense 86,564 72,343 49,057
Depreciation 139,834 143,042 121,616
Store closing charge
(Note 13) 170,500
1,356,201 1,482,191 1,145,784
Income before
income taxes 252,698 6,352 290,605
Provision for income taxes 99,800 2,500 112,600
Net income $ 152,898 $ 3,852 $ 178,005
Earnings per share $ .32 $ .01 $ .37
(Results as a percentage
of sales)
Net sales 100.00% 100.00% 100.00%
Cost of goods sold 79.72 80.44 80.04
Gross profit 20.28 19.56 19.96
Selling and administrative
expenses 14.24 14.41 13.56
Interest expense 1.09 0.95 0.68
Depreciation 1.76 1.88 1.69
Store closing charge
(Note 13) 2.24
17.09 19.48 15.93
Income before
income taxes 3.19 0.08 4.03
Provision for income taxes 1.26 0.03 1.56
Net income 1.93% 0.05% 2.47%
The accompanying notes are an integral part of the financial statements.
Balance Sheets
December 31, January 1,
(Dollars in thousands 1994 1994
except per share amounts)
Assets
Current assets:
Cash and cash equivalents $ 66,869 $ 46,066
Receivables 140,628 109,952
Inventories 855,712 929,138
Prepaid expenses and other 67,905 54,316
Total current assets 1,131,114 1,139,472
Property, at cost, less accumulated
depreciation 1,356,673 1,364,211
Total assets $2,487,787 $2,503,683
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 20,000 $ 10,007
Accounts payable, trade 344,595 346,799
Accrued expenses 298,024 241,187
Long-term debt - current 25 183
Capital lease obligations - current 9,122 7,108
Other liabilities - current 3,293 3,880
Income taxes payable 22,169 10,107
Total current liabilities 697,228 619,271
Long-term debt 355,300 569,350
Capital lease obligations 304,963 301,541
Deferred income taxes 46,190 36,587
Deferred compensation 668 571
Other liabilities 56,085 58,809
Total liabilities 1,460,434 1,586,129
Shareholders' equity:
Class A non-voting common stock,
$.50 par value; authorized 1,500,000,000
shares; issued and outstanding 244,142,000
shares - December 31, 1994 and 244,132,000
shares - January 1, 1994 122,071 122,066
Class B voting common stock, $.50
par value; authorized 1,500,000,000
shares; issued and outstanding 239,571,000 119,786 119,786
shares
Additional capital 337 289
Retained earnings 785,159 675,413
Total shareholders' equity 1,027,353 917,554
Total liabilities and
shareholders' equity $2,487,787 $2,503,683
The accompanying notes are an integral part of the financial statements.
Statements of Cash Flows
December 31, January 1,
1994 1994
(Dollars in thousands)
Cash flows from operating activities
Net income $152,898 $ 3,852
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 139,834 143,042
(Gain) loss on disposals of property ( 477) 529
Store closing charge (Note 13) 170,500
Deferred income taxes ( 3,800) ( 55,500)
Changes in operating assets
and liabilities:
Receivables ( 30,676) ( 13,965)
Inventories 73,426 ( 32,753)
Prepaid expenses and other ( 186) 4,933
Accounts payable and accrued expenses 53,201 38,837
Income taxes payable 12,062 10,107
Deferred compensation 97 ( 1,153)
Other liabilities ( 3,311) ( 241)
Total adjustments 240,170 264,336
Net cash provided by operating
activities 393,068 268,188
Cash flows from investing activities
Proceeds from sale of property 2,085 2,382
Capital expenditures ( 117,312) ( 159,857)
Net cash used in investing
activities ( 115,227) ( 157,475)
Cash flows from financing activities
Net proceeds (payments) under short-term
borrowings 9,993 ( 449,743)
Principal payments under capital
lease obligations ( 9,724) ( 6,730)
Principal payments on long-term debt ( 214,208) ( 280)
Proceeds from issuance of common stock 53 69
Proceeds from issuance of long-term debt 329,000
Dividends paid ( 43,152) ( 42,086)
Net cash (used in) provided by
financing activities ( 257,038) ( 169,770)
Net increase (decrease)in cash and cash
equivalents 20,803 ( 59,057)
Cash and cash equivalents at beginning
of year 46,066 105,123
Cash and cash equivalents at end of year $ 66,869 $ 46,066
The accompanying notes are an integral part of the financial statements
Statements of Cash Flows
January 2,
1993
(Dollars in thousands)
Cash flows from operating activities
Net income $178,005
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 121,616
Loss (gain) on disposals of property ( 166)
Deferred income taxes 11,100
Changes in operating assets
and liabilities:
Receivables 1,119
Inventories ( 51,846)
Prepaid expenses and other ( 8,289)
Accounts payable and accrued expenses ( 6,336)
Income taxes payable ( 21,960)
Deferred compensation 37
Other liabilities 1,391
Total adjustments 46,666
Net cash provided by operating
activities 224,671
Cash flows from investing activities
Proceeds from sale of property 471
Capital expenditures (402,327)
Net cash used in investing
activities (401,856)
Cash flows from financing activities
Net (payments) proceeds under short-term
borrowings 337,250
Principal payments under capital
lease obligations ( 4,976)
Principal payments on long-term debt ( 970)
Proceeds from issuance of common stock 471
Proceeds from issuance of long-term debt
Dividends paid ( 53,812)
Net cash provided by (used in)
financing activities 277,963
Net (decrease) increase in cash and cash
equivalents 100,778
Cash and cash equivalents at beginning
of year 4,345
Cash and cash equivalents at end of year $105,123
The accompanying notes are an integral part of the financial statements
Statements of Shareholders' Equity
Class A Class B
(Dollars and shares in thousands Common Stock Common Stock
except per share amounts) Shares Amount Shares Amount
Balances December 28, 1991 162,692 $ 81,346 159,714 $ 79,857
Cash dividends declared:
Class A - $.1120 per share
Class B - $.1104 per share
Sale of stock 66 33
Three-for-two stock split 81,364 40,682 79,857 39,929
Net income
Balances January 2, 1993 244,122 122,061 239,571 119,786
Cash dividends declared:
Class A - $.0880 per share
Class B - $.0860 per share
Sale of stock 10 5
Net income
Balances January 1, 1994 244,132 122,066 239,571 119,786
Cash dividends declared:
Class A - $.0902 per share
Class B - $.0882 per share
Sale of stock 10 5
Net income
Balances December 31, 1994 244,142 $122,071 239,571 $119,786
The accompanying notes are an integral part of the financial statements
Additional Retained
Capital Earnings Total
Balances Dec. 28, 1991 $ 1,952 $667,900 $ 831,055
Cash dividends declared
Class A - $.1120 per share ( 27,355) ( 27,355)
Class B - $.1104 per share ( 26,457) ( 26,457)
Sale of stock 438 471
Three-for-two stock split (2,165) ( 78,446)
Net Income 178,005 178,005
Balances Jan. 2, 1993 225 713,647 955,719
Cash dividends declared
Class A - $.0880 per share ( 21,483) ( 21,483)
Class B - $.0860 per share ( 20,603) ( 20,603)
Sale of stock 64 69
Net Income 3,852 3,852
Balances Jan. 1, 1994 289 675,413 917,554
Cash dividends declared
Class A - $.0902 per share ( 22,021) ( 22,021)
Class B - $.0882 per share ( 21,131) ( 21,131)
Sale of stock 48 53
Net Income 152,898 152,898
Balances Dec. 31, 1994 $ 337 $785,159 $1,027,353
Notes to Financial Statements
(Dollars in thousands except per share amounts)
1. Summary of Significant Accounting Policies
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to December 31. The year
ended January 2, 1993 was 53 weeks.
Single Industry Segment
The Company engages in one line of business, the operation of general food
supermarkets.
Merchandise Inventories
Inventories are stated at the lower of cost or market. Inventories valued using
the last-in, first out (LIFO) method comprised approximately 95% and 100% of
inventories, in 1994 and 1993, respectively. Meat, produce and deli inventories
are valued on the first-in, first-out (FIFO) method. If the FIFO method were
used entirely, inventories would have been $79,221 and $60,246 greater in 1994
and 1993, respectively. In 1994, the LIFO reserve was increased by $2.6 million
as a result of the termination of meat, produce and deli LIFO pools.
Statements of Cash Flows
The Company considers all highly liquid investment instruments purchased with an
original maturity of three months or less to be cash equivalents.
Cash paid during the years 1994, 1993 and 1992 was as follows:
1994 1993 1992
Interest (net of amounts capitalized) $ 86,645 $ 67,319 $ 44,728
Income taxes 60,005 53,288 125,634
Capital lease obligations of $36,140, $62,760 and $59,148 were incurred in 1994,
1993 and 1992, respectively. Capital lease retirements of $21,012, $1,653 and
$2,709 were recorded in 1994, 1993 and 1992, respectively.
The Company acquired new equipment totaling $32 and $3,528 for 1994 and 1993,
respectively, which was financed with capital leases.
Notes to Financial Statements
(Dollars in thousands except per share amounts)
Depreciation
Depreciation is provided on a straight-line basis over the estimated service
lives of assets, generally as follows:
Buildings 40 years
Furniture, fixtures and equipment 3 - 10 years
Leasehold improvements 8 years
Vehicles 7 years
Property under capital leases Lease term
Cost of Goods Sold
Purchases are recorded net of cash discounts.
Pre-opening Costs
Costs associated with the opening of new stores are expensed as incurred.
Income Taxes
Deferred tax liabilities or assets are established for temporary differences
between financial and tax reporting bases and are subsequently adjusted to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse.
Earnings Per Share
Earnings per share are based on the weighted average number of shares
outstanding.
2. Property
Property consists of the following:
1994 1993
Land and improvements $ 185,403 $ 172,980
Buildings 393,012 382,186
Furniture, fixtures and equipment 947,126 907,640
Vehicles 95,198 90,518
Leasehold improvements 107,392 85,698
Construction in progress (estimated
costs to complete and equip at
December 31, 1994 are $34.5 million) 32,501 26,322
1,760,632 1,665,344
Less accumulated depreciation 676,930 573,135
1,083,702 1,092,209
Property under capital leases
(less accumulated depreciation
of $67,869 and $55,987 for 1994
and 1993, respectively) 272,971 272,002
$1,356,673 $1,364,211
Property is recorded net of provisions totaling $80.2 million and $87.1 million
for 1994 and 1993, respectively, to reflect the realizable value of properties
that are held for sale as part of the Company's 1994 store closing program (Note
13).
3. Accrued Expenses
Accrued expenses consist of the following:
1994 1993
Employee profit sharing $ 77,572 $ 62,241
Payroll 34,922 42,253
Provision for store closings
(Note 13) 27,310 28,305
Self insurance 51,006 37,825
Other 107,214 70,563
$298,024 $241,187
4. Employee Benefit Plan
The Company has a noncontributory profit sharing plan covering all employees.
The plan provides benefits to participants upon death, retirement or termination
of employment with the Company. Contributions to the profit sharing plan are
determined by the Company's Board of Directors.
Profit sharing expense totaled $77.6 million in 1994, $62.2 million in 1993 and
$82.2 million in 1992.
5. Long-Term Debt
Long-term debt consists of the following:
1994 1993
Senior note agreement, due from 1998
to 2003. Interest ranges from 6.97%
to 8.00%. $214,000
Medium term notes, due from 1999 to
2006. Interest ranges from 8.32%
to 8.73%. $150,300 150,300
Note purchase agreements, due 1998.
Interest is at 10.21%. 50,000 50,000
Note purchase agreements, due 1997.
Interest is at 8.25%. 40,000 40,000
Convertible subordinated debentures, due 2003.
Interest is at 5%. The debentures are convertible
at any time into shares of the Company's Class A
non-voting common stock at a conversion price of
$7.90 per share, subject to adjustment under
certain circumstances. 115,000 115,000
Other 25 233
355,325 569,533
Less current portion 25 183
$355,300 $569,350
During the fourth quarter of 1994, the Senior note agreement totaling $214.0
million was prepaid with no prepayment penalty.
At December 31, 1994 property with a net book value of approximately $23.9
million was pledged as collateral for long-term debt.
At December 31, 1994 and January 1, 1994 the Company estimated that the market
value of its long-term debt was approximately $344.4 million and $610.0 million,
respectively. The fair value of the Company's long-term debt is estimated based
on the current rates offered to the Company for debt of the same remaining
maturities.
Approximate maturities of long-term debt in the years 1995 through 1999 are
$0.03, $0, $40.0, $50.0 and $27.0 million.
6. Credit Arrangements
The Company maintains a revolving credit facility with a syndicate of commercial
banks providing $350.0 million in committed lines of credit. This facility will
expire in November, 1999. There were no borrowings outstanding at December 31,
1994.
Additionally, the Company had other committed short-term lines of credit with
banks totaling $30.5 million of which no borrowings were outstanding at December
31, 1994.
The Company has a $250.0 million commercial paper program, of which no
borrowings were outstanding at December 31, 1994 and January 1, 1994.
In addition, the Company has periodic short-term borrowings under informal
arrangements. Outstanding borrowings under these arrangements were $20.0
million at December 31, 1994 at an average interest rate of 6.05% and $10.0
million at January 1, 1994 at an average interest rate of 3.50%.
Notes to Financial Statements
(Dollars in thousands except per share amounts)
7. Leases
The Company's stores operate principally in leased premises. Lease terms
generally range from ten to twenty-five years with renewal options ranging from
ten to twenty years. The following schedule shows future minimum lease payments
under capital leases, together with the present value of net minimum lease
payments, and operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 1994.
Capital Operating
Leases Leases
1995 $ 52,221 $ 108,736
1996 52,169 108,384
1997 51,866 107,927
1998 51,818 107,987
1999 50,771 107,685
Thereafter 592,147 993,945
Total minimum payments 850,992 $1,534,664
Less estimated executory
costs 108,352
Net minimum lease payments 742,640
Less amount representing
interest 428,555
Present value of net minimum
lease payments $ 314,085
Minimum payments have not been reduced by minimum sublease rentals of $5.4
million due in the future under noncancelable subleases or the remaining rent
payments on leased stores that have been closed.
Total rent expense for operating leases, excluding those with terms of one year
or less that were not renewed, is as follows:
1994 1993 1992
Minimum rents $113,606 $102,390 $ 93,034
Contingent rents,
based on sales 490 608 727
$114,096 $102,998 $93,761
In addition, the Company has signed lease agreements for additional store
facilities, the construction of which was not complete at December 31, 1994.
The leases expire on various dates extending to 2019 with renewal options
generally ranging from ten to twenty years. Total future minimum rents under
these agreements are approximately $216.0 million.
8. Income Taxes
Provisions for income taxes for 1994, 1993 and 1992 consist of the following:
Current Deferred Total
1994
Federal $ 86,400 $( 3,200) $ 83,200
State 17,200 ( 600) 16,600
$103,600 $( 3,800) $ 99,800
1993
Federal $ 48,400 $(46,300) $ 2,100
State 9,600 ( 9,200) 400
$ 58,000 $(55,500) $ 2,500
1992
Federal $ 84,200 $ 9,700 $ 93,900
State 17,300 1,400 18,700
$101,500 $ 11,100 $112,600
The Company's effective tax rate varied from the federal statutory rate as
follows:
1994 1993 1992
Federal statutory rate 35.0% 35.0% 34.0%
State income taxes, net of
federal tax benefit 4.3 4.1 4.4
Other 0.2 0.3 0.3
39.5% 39.4% 38.7%
Deferred income tax expense relates to the following:
1994 1993 1992
Excess tax depreciation $ 11,409 $ 18,438 $ 19,824
Excess interest and amortization
over rent on capital leases ( 3,229) ( 3,537) ( 2,819)
Inventory capitalization 94 ( 283) ( 489)
Provision for store closings 5,080 ( 66,870)
Accrued expenses (12,507) ( 14,879) (18,994)
Other ( 4,647) 11,631 13,578
$ ( 3,800) $( 55,500) $ 11,100
The components of deferred income tax assets and liabilities at December 31,
1994 and January 1, 1994 are as follows:
1994 1993
Current assets:
Inventories $ 15,800 $ 11,141
Accrued expenses 31,512 20,327
Provision for store closings 6,776 9,217
Total current assets included in prepaid
expenses and other 54,088 40,685
Noncurrent assets/(liability):
Depreciation (117,086) (107,523)
Leases 15,882 13,283
Provision for store closings 55,014 57,653
Total noncurrent liability ( 46,190) ( 36,587)
Net deferred taxes $ 7,898 $ 4,098
Notes to Financial Statements
(Dollars in thousands except per share amounts)
9. Other Liabilities
Other liabilities consist of the following:
1994 1993
Present value of remaining rent payments
on leased stores closed
(Note 13) $50,034 $55,100
Other 9,344 7,589
59,378 62,689
Less current portion 3,293 3,880
$56,085 $58,809
10. Stock Option Plans
The Company has stock option plans under which options to purchase shares of
Class A common stock may be granted to officers and key employees at prices not
less than fair market value on the date of grant. Options become exercisable
at such time or times as determined by the Stock Option Committee of the Board
of Directors of the Company on the date of grant, provided that no option may be
exercised more than ten years after the date of grant.
Transactions in stock options are summarized as follows:
Shares
Under
Option Price Per Share
Outstanding at 1991 803,654 $3.75 - 15.83
Granted 117,425 8.25 - 17.58
Exercised ( 92,675) 3.75 - 8.58
Cancelled ( 129,193) 4.71 - 16.67
Outstanding at 1992 699,211 $6.09 - 17.58
Granted 2,842,325 5.25 - 11.25
Exercised ( 9,826) 6.09 - 8.33
Cancelled ( 207,190) 5.25 - 16.17
Outstanding at 1993 3,324,520 $5.25 - 17.58
Granted 187,650 5.25 - 6.38
Exercised ( 9,270) 5.25 - 6.17
Cancelled ( 493,970) 5.25 - 15.83
Outstanding at 1994 3,008,930 $5.25 - 17.58
On December 31, 1994, options for the purchase of 2,567,480 shares of Class A
common stock were exercisable and 2,354,800 shares of Class A common stock were
available for future grants.
11. Common Stock
On December 31, 1994, approximately 23.5% and 14.7% of the Class A non-voting
common stock and 23.8% and 26.5% of the Class B voting common stock were held,
respectively, by Etablissements Delhaize Freres et Cie "Le Lion" S.A.
("Delhaize") and Delhaize the Lion America, Inc., a wholly owned subsidiary of
Delhaize ("Detla"). In the aggregate, Delhaize and Detla owned approximately
50.3% of the Class B voting common stock and 44.2% of the combined common stock
as of December 31, 1994.
Holders of Class B common stock are entitled to one vote for each share of Class
B common stock held, while holders of Class A common stock are not entitled to
vote except as required by law.
The Board of Directors of the Company may declare dividends with respect to
Class A common stock in excess of dividends declared and paid with respect to
the Class B common stock or without declaring and paying any dividends with
respect to the Class B common stock. When dividends are declared with respect
to the Class B common stock, the Board of Directors of the Company must declare
a greater per share dividend to the holders of Class A common stock.
12. Interest Expense
Interest expense consists of the following:
1994 1993 1992
Interest on capital leases $38,511 $34,905 $28,457
Other interest (net of $1.0, $4.6
and $9.5 million capitalized in
1994, 1993, and 1992, respectively.) 48,053 37,438 20,600
$86,564 $72,343 $49,057
13. Store Closing Charge
On January 7, 1994, Food Lion announced plans to close 88 unprofitable store
locations in 1994. During the first six months of 1994, the Company closed 84
of these stores (a decision was made in early 1994 to keep four stores open). In
1993, the Company established a pre-tax charge against 1993 earnings of $170.5
million (after tax $104 million, or 22 cents per share) to cover management's
best estimate of the costs associated with the store closings. During 1994, the
Company charged $13.0 million against the provision related primarily to the
payment of remaining rent obligations on leased stores, disposition of store
inventory and the disposition of property. As efforts to dispose store
properties continue, the Company will monitor the provision and adjust it
accordingly. (See Notes 2, 3 and 9 for related information).
Report of Independent Accountants
To the Shareholders of Food Lion, Inc.:
We have audited the accompanying balance sheets of Food Lion, Inc., as of
December 31, 1994 and January 1, 1994 and the related statements of income,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Food Lion, Inc., as of December
31, 1994 and January 1, 1994 and the results of its operations and its cash
flows for each of the three fiscal years in the period ended December 31, 1994
in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Charlotte, North Carolina
February 8, 1995
Results by Quarter
(Dollars in thousands except First Second Third Fourth
per share amounts) (12 Weeks) (12 Weeks) (12 Weeks) *(16 Weeks)
1994
Net sales $1,804,022 $1,821,905 $1,849,806 $2,456,859
Gross profit 363,210 369,800 375,411 500,478
Net income 31,156 34,800 36,553 50,389
Earnings per share .06 .07 .08 .11
1993
Net sales $1,656,825 $1,749,923 $1,807,374 $2,395,695
Gross profit 316,075 343,836 361,058 467,574
Net income 21,918 30,693 24,686 ( 73,445)
Earnings per share .05 .06 .05 ( .15)
*NOTE: As a result of the store closing charge, net income decreased $104
million (or 22 cents per share) in the fourth quarter of 1993.
Market Price of Common Stock
Years Ended
December 31, 1994 January 1, 1994
Class A Class B Class A Class B
Quarter High Low High Low High Low High Low
First 7 1/8 5 1/2 7 1/4 5 3/4 8 6 5/8 8 1/4 6 5/8
Second 6 1/4 5 1/2 6 3/8 5 3/4 7 1/4 5 7/8 7 1/8 5 3/4
Third 6 3/8 5 1/2 6 5/8 5 9/16 7 5 1/4 7 5 3/8
Fourth 6 5 1/8 6 5 1/8 6 11/16 5 1/4 6 7/8 5 3/8
The Company's Class A and the Class B common stock trades on The Nasdaq Stock
Market under the symbol: FDLNA and FDLNB, respectively. Price quotations are
reported in the Nasdaq National Market System. The closing market prices per
share for the Class A and Class B common stock at December 31, 1994 were $5.125
compared with $6.50 and $6.625, for Class A and Class B common stock,
respectively, at January 1, 1994. The over-the-counter quotations reflect inter-
dealer prices without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions. On February 6, 1995, there were
33,008 holders of record of Class A common stock and 19,517 holders of record of
Class B common stock. The closing market prices per share for the Class A and
the Class B common stock at February 6, 1995 were $5.375.
Dividends Declared Per Share of Common Stock
Years Ended
December 31, 1994 January 1, 1994
Quarter Class A Class B Class A Class B
First $.0220 $.0215 $.0220 $.0215
Second .0220 .0215 .0220 .0215
Third .0231 .0226 .0220 .0215
Fourth .0231 .0226 .0220 .0215
Total $.0902 $.0882 $.0880 $.0860
Results of Operations
Sales
Sales for the 52 weeks ended December 31, 1994 were $7.9 billion,
compared with $7.6 billion in 1993 and $7.2 billion in 1992 (53
weeks), representing annual increases of 4.2%, 5.8% and 11.8%,
respectively. Same store sales, sales for stores open in comparable
periods, increased 3.3% in 1994 compared with decreases of 2.6% in
1993 and .4% in 1992. In 1994, same store sales increased 3.0%, 2.8%,
3.2% and 4.2%, respectively, for the first, second, third and fourth
quarters.
The Company's business plan for 1994 included the closing of 84
underperforming stores in the first two quarters of 1994, resulting in
1,039 stores operating at the end of the fiscal year compared with
1,096 stores last year. The Company opened 30 new stores in 1994
(three of these replacing older stores) and renovated 65 existing
stores.
The sales performance for 1994 was particularly positive in light
of the Company's closing of underperforming stores. The Company
initiated several new programs during fiscal 1994 to better meet the
specific needs of our customers. The Company reorganized management
responsibilities into three operating divisions, Northern, Central and
Southern, in an effort to better serve customers by regionalizing
merchandising and marketing functions. In the third quarter of 1994,
the Company kicked off its Gold Lion Guarantee initiative, the
communication of Food Lion's commitment to customers to provide
quality, service, cleanliness, and friendliness in addition to a
continued commitment to Extra Low Prices. This strategy has been
highlighted by new television, radio and print advertisements and a
new store signage program. In the fourth quarter of 1994, the Company
began enrolling customers in the MVP Customer program, which is
available to all customers and will provide discounts up to 20% on
selected products when customers present their MVP card at the cash
register.
The 1995 business plan includes opening 50 new stores and
renovating 120 existing stores, which includes adding deli/bakeries
and additional square footage to most of these stores. The Company is
committed to a growth strategy which includes opening new stores and
strengthening existing stores through an aggressive store renovation
program to maintain a competitive edge in existing markets. The sales
results from the 1994 renovations have been impressive, and the
Company's plan for 120 renovations in 1995 will add additional square
footage as well as strengthen sales increases in renovated units. Food
Lion's strategy is flexible, and the Company will continue to listen
to its customers and revise its strategy accordingly in an effort to
provide Extra Low Prices And More for its customers.
Gross Profit
Gross profit was 20.28% of sales in 1994, as compared with 19.56%
in 1993 and 19.96% in 1992. Gross profit increased by 0.72% of sales
in 1994 as the Company's continuing commitment to providing quality,
freshness and cleanliness contributed to increases in both the number
of customers and items purchased per customer in the higher margin
departments of meat, perishable and deli. The Company's promotional
activity for 1994, although somewhat greater than historical levels,
decreased from 1993 levels and became more focused to target specific
geographic areas in an effort to increase sales and profits.
Additionally, as a part of the reorganization of the Company's
operating structure in 1994, the Company began implementing a category
management system designed to maximize gross profits through increased
efficiencies in purchasing and pricing.
The LIFO charge, as a percent of sales, reduced gross profit by
0.21% in 1994, 0.14% in 1993 and increased gross profit by 0.01% in
1992, resulting in FIFO gross profits of 20.49%, 19.70% and 19.95%,
respectively for 1994 and the two prior years.
The decline in gross profits in 1993 and 1992, as compared to
previous years, was due in part to increased promotional activity
(featured special pricing on certain products, double couponing,
etc.)designed to increase customer traffic and sales, and a change in
the sales mix with lower sales in high margin departments such as meat
and deli.
Selling and Administrative Expenses
Selling and administrative expenses as a percentage of sales were
14.24%, 14.41% and 13.56% in 1994, 1993, and 1992, respectively. The
1994 decrease of 0.17% of sales was the result of improved store
operating costs such as rent, utilities and other miscellaneous
expenses due in part to the closing of 84 underperforming stores in
1994 as well as lower costs due to opening 30 new stores in 1994
compared with 100 new stores in 1993. Increases in employee benefit
costs and self insurance expenses partially offset the lower operating
costs in 1994.
The Company continued marketing strategies that it began in 1993
focusing on enhancing the Company's image. During the year, the
Company kicked off the Gold Lion Guarantee initiative, which
communicates the Company's commitment to quality, freshness,
cleanliness, service and friendliness, through advertising using the
theme Extra Low Prices and More. The Company believes the Gold Lion
Guarantee and other programs such as the MVP Customer Card, described
above under "Sales", will enhance the Company's service to its
customers and help position the Company for continued success in the
future.
Food Lion's 1994 and 1995 business plan reflected the Company's
commitment to maintaining its existing store base as 65 store
renovations were completed in 1994 compared with 30 in 1993. In 1995,
the Company plans to complete 120 renovations to existing stores.
Store renovations negatively impact the Company's operating expenses
such as rent and utilities, but add value to customers as seen by
sales increases experienced in renovated stores (average sales
increases of more than 10% after renovation). The Company plans to
continue an aggressive renovation program to maintain a quality
shopping environment for customers in all Food Lion stores.
The Company continues to incur increased advertising, legal and
public relations costs to strengthen customer relations and to combat
efforts by the United Food and Commercial Workers Union
International's "Corporate Campaign" to discredit and damage Food
Lion's credibility. The Company expects such costs to continue in
1995.
Expenses in 1993 were affected by a third quarter settlement of
all outstanding claims by the U.S. Department of Labor ("DOL") brought
under the Fair Labor Standards Act. Under the settlement, the Company
agreed to pay $16.2 million. The Company had previously established
provisions to cover potential costs associated with the DOL
investigation, which limited the actual impact on 1993 selling and
administrative expenses and pre-tax 1993 earnings to $8.2 million.
Although the Company anticipates some continued pressure on
expenses to implement its 1995 business plan and enhance customer
satisfaction, Food Lion expects expenses as a percentage of sales to
decrease slightly in 1995.
Interest Expense
Interest expense was 1.09% of sales in 1994 compared with 0.95%
in 1993 and 0.68% in 1992. Interest expense increased in 1994 due to
the amortization of rent obligations on the 1994 store closings and
lower capitalized interest as a result of less construction (during
1994, eight company-owned stores were constructed compared with 31
company- owned stores in 1993 and 61 company-owned stores and a
perishable distribution center in 1992). The year-to-year comparison
was also affected by higher interest rates on long-term financing
obtained during the second quarter of 1993 that replaced short-term
borrowings outstanding.
Interest expense increased during fiscal 1993 over the fiscal
year 1992 level due to a decrease in interest capitalized as a result
of less construction. The construction of company-owned stores was a
continuation of the decision in 1991 to build and own stores in
markets where leasing was not economically advantageous due to
depressed real estate conditions.
During 1995, the Company expects interest expense to decrease due
to its prepayment of the $214.0 million note agreement and the fact
that it does not anticipate additional long-term borrowings.
Depreciation Expense
Depreciation expense as a percentage of sales was 1.76% in 1994,
1.88% in 1993 and 1.69% in 1992. Depreciation decreased as a
percentage of sales in 1994 as a result of closing 84 underperforming
stores and a decrease in the number of stores opened. During 1994, the
Company constructed and equipped eight stores, equipped 22 leased
stores, renovated 65 existing stores and began construction to expand
its Greencastle, Pennsylvania distribution center. During 1993, the
Company constructed and equipped 31 stores, equipped 69 leased stores
and renovated 30 existing stores. In 1992, the Company completed a new
perishable distribution center in Salisbury, North Carolina,
constructed and equipped 61 stores and equipped 79 leased stores.
The Company will finance the majority of its store growth in 1995
with conventional lease arrangements, but will continue to build and
own stores in market areas where leasing is not economically
advantageous. The Company expects depreciation to decrease as a
percentage of sales in 1995 primarily as a result of the 84 store
closings in 1994.
Store Closing Charge
During the first two quarters of 1994, the Company closed 84
underperforming stores as part of its 1994 and 1995 business plan. The
Company established a pre-tax charge against 1993 earnings of $170.5
million (approximately $104 million after tax) to cover management's
best estimate of the costs associated with closing these stores.
These costs include provisions against store assets to reflect
estimated realizable values ($87.1 million), the unrealizable portion
of the present value of remaining rent payments on leased stores
($55.1 million), and other costs associated with the store closings
such as legal expenses and relocation expenses ($28.3 million). As of
the end of 1994, the Company had charged $13.0 million against the
provision, primarily as a result of the payment of remaining rent
obligations on leased stores and disposition of store inventory and
property.
The Company recorded approximately $30 million in annual pre-tax
losses in 1993 attributable to these stores that will not recur in
future years. The Company will not realize the total annual benefit of
these store closings until 1995. At the end of 1994, the Company was
early in the process of efforts to dispose or sublease these store
properties but is encouraged by initial interest in properties and is
optimistic about successful disposition or subleasing of most of the
units involved. As a result, the Company has not further adjusted the
realizable value of the properties at this time. The Company will
continue to monitor and evaluate the provision to make necessary
adjustments.
LIFO
In 1994, the LIFO reserve increased $16.3 million, as compared to
an increase of $10.8 million in 1993 and a decrease of $.9 million in
1992. During 1994, inflationary coffee costs were a large part of the
LIFO reserve increase. During 1993, the Company experienced cost
increases on certain products resulting primarily from inclement
weather in the spring and summer of 1993. Food Lion experienced
deflation in food costs in 1992.
Income Taxes
The provision for income taxes was $99.8 million in 1994, $2.5
million in 1993 and $112.6 million in 1992. The decrease in 1993
resulted from a decrease in earnings primarily as a result of the
store closing charge discussed above. The Company's effective tax rate
was 39.5% in 1994 compared with 39.4% in 1993 and 38.7% in 1992. The
increase in the effective tax rate in 1993 is the result of the
Omnibus Budget Reconciliation Act of 1993, which increased the federal
income tax rate by 1% retroactive to the beginning of 1993. Assuming
there are no additional federal or state income tax rate increases,
Food Lion expects the effective rate for 1995 and forward to be 39.5%.
Liquidity and Capital Resources
Cash provided by operating activities increased to $393.1 million
in 1994 compared with $268.2 million in 1993 and $224.7 million in
1992. The increase in 1994 was due to improved earnings, lower
inventories achieved by continued improvement in inventory management
techniques such as just-in-time inventory and the closing of
underperforming stores in early 1994. Accounts payable, accrued
expenses and income taxes payable increases also contributed to the
increase in cash provided by operating activities in 1994.
Cash capital expenditures decreased to $117.3 million in 1994,
compared with $159.9 million in 1993 and $402.3 million in 1992.
During 1994, the Company equipped a total of 30 new stores,
constructed eight company-owned stores, completed 65 store renovations
and began construction of an expansion of its Greencastle,
Pennsylvania distribution center. In comparison, the Company equipped
100 new stores, constructed 31 stores, and renovated 30 stores in 1993
and equipped 140 stores, constructed 61 stores, completed construction
of a new perishable distribution center and renovated a number of
existing stores in 1992.
As a result of 87 total store closings (three of these offset by
new stores) and 30 new store openings in 1994, total stores decreased
from 1,096 to 1,039. The total distribution space owned by the Company
increased to 10.0 million square feet compared with 9.5 million in
1993 and 8.9 million in 1992.
In 1995, Food Lion plans to move forward with its two-track
growth plan, which focuses on a combination of renovations and new
store openings. The Company expects to open a total of 50 new stores
and to renovate an additional 120 stores in 1995. The majority of the
new stores will be opened under conventional leasing arrangements and,
as a result, the impact on liquidity of owning stores will be
insignificant in 1995. Cash capital expenditures currently estimated
for 1995 include approximately $54 million to construct new stores and
$49 million to equip new and renovated stores, $5 million for
additional land costs and approximately $15 million to expand an
existing distribution center.
Cash capital expenditures for 1995 will be financed through funds
generated from operations, existing bank and credit lines, and other
debt, if necessary. The Company will consider the possibility of sale-
leaseback transactions on certain free-standing, company-owned stores
in the future if advantageous opportunities are presented by potential
lessors.
Debt
During the fourth quarter of 1994, the Company pre-paid three
series of senior unsecured notes totaling $214.0 million which were
due from 1998 to 2003 at interest rates ranging from 6.97% to 8.00%.
Additionally, in the fourth quarter of 1994, the Company
completed a revolving credit facility with a syndicate of commercial
banks providing $350.0 million in committed lines of credit. This
facility will expire in November, 1999. There were no borrowings
against these lines at December 31, 1994.
In 1993, the Company sold $115.0 million of 5% convertible
subordinated debentures due 2003. The debentures are convertible into
shares of the Company's Class A non-voting stock at $7.90 per share.
The Company also maintains additional committed lines of credit
totaling $30.5 million. These lines of credit are available when
needed. The Company is not required to maintain compensating balances
related to these lines of credit and borrowings may occur
periodically. The Company had no borrowings outstanding under these
lines at December 31, 1994.
The Company has a $250.0 million commercial paper program which
is outlined in the table below.
Commercial Paper Program
(Dollars in millions)
1994 1993 1992
Outstanding borrowings at year end $ 0 $ 0 $173.3
Average borrowings 0 51.6 50.4
Maximum amount outstanding 0 183.0 173.3
Daily weighted average interest rate N/A 3.39% 3.54%
Finally, the Company has periodic short-term borrowings under
informal credit arrangements which are available to the Company at the
discretion of the lender (see table below):
Informal Credit Arrangements
(Dollars in millions)
1994 1993 1992
Outstanding borrowings at year end $20.0 $ 10.0 $171.0
Average borrowings 2.4 59.0 87.6
Maximum amount outstanding 20.0 203.6 206.0
Daily weighted average interest rate 5.62% 3.56% 3.84%
Impact of Inflation
The inflation rate for food prices in 1994 of 3.5% was above the
overall increase in the Consumer Price Index of 2.7% for the year.
Inventory and labor, the Company's primary costs, increase with
inflation and, where possible, will be recovered through operating
efficiencies and gross profits.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Food Lion, Inc. on Form S-8 (File Nos. 33-18796 and 33-
18797) and Form S-3 (File No. 33-40457) of our report dated February 8,
1995, on our audits of the financial statements and financial statement
schedule of Food Lion, Inc. as of December 31, 1994, and January 1,
1994, and for the fiscal years ended December 31, 1994, January 1, 1994
and January 2, 1993, which report is included in this Annual Report on
Form 10-K.
COOPERS & LYBRAND, L.L.P.
Charlotte, North Carolina
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
12/31/94 BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> DEC-31-1994
<CASH> 66,869
<SECURITIES> 0
<RECEIVABLES> 140,628
<ALLOWANCES> 0
<INVENTORY> 855,712
<CURRENT-ASSETS> 1,131,114
<PP&E> 2,101,471
<DEPRECIATION> 744,798
<TOTAL-ASSETS> 2,487,787
<CURRENT-LIABILITIES> 697,228
<BONDS> 355,300
<COMMON> 241,857
0
0
<OTHER-SE> 785,496
<TOTAL-LIABILITY-AND-EQUITY> 2,487,787
<SALES> 7,932,592
<TOTAL-REVENUES> 7,932,592
<CGS> 6,323,693
<TOTAL-COSTS> 6,323,693
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,564
<INCOME-PRETAX> 252,698
<INCOME-TAX> 99,800
<INCOME-CONTINUING> 152,898
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,898
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
</TABLE>
Exhibit 99
UNDERTAKING TO FILE EXHIBITS PURSUANT
TO ITEM 601(b)(4)(iii)(A) OF REGULATIONS S-K
The undersigned registrant acknowledges that it has not filed
with the Securities and Exchange Commission (the "Commission") copies
of certain instruments with respect to long-term debt of the
registrant representing obligations not exceeding 10% of the
registrant's total assets as of December 31, 1994, pursuant to the
provisions of Item 601(b)(4)(iii)(A) of Regulation S-K of the
Commission (the "Regulation").
Pursuant to the Regulation, the undersigned registrant hereby
undertakes to furnish to the Commission upon its request a copy of
any such instrument, including nine Note Purchase Agreements dated
January 30, 1987 between the Company and various parties, in amounts
ranging from $500,000 to $18 million and totaling $40 million, nine
Note Purchase Agreements dated July 20, 1988 between the Company and
various parties, in amounts ranging from $1.5 million to $15 million
and totaling $50 million, and convertible subordinated debentures
dated June 15, 1993 totaling $115 million.
This is the day of , 1995.
FOOD LION, INC.
Dan Boone, Vice President of
Finance
